Video game gold mine

Some 540 million estimated to play as revenues surge in China

Compared to other gaming sectors, console gaming in China is still in its infancy but analysts said it is poised for big growth.

Neo Zheng, a research manager at market research firm International Data Corporation, said that fewer than 600,000 gaming consoles, such as Sony’s Playstation 4 or the Nintendo 3DS, were sold in China last year.

That’s less than two percent of the total worldwide console sales. In contrast, more than 15.5 million were sold in the United States.

“There is large potential for that sort of device growing in the next couple of years,” Zheng said.

Andrew Horn, project manager at Daxue Consulting, said he expected the penetration rate for consoles in China wouldreach20percent in2017, whereas the 2014 gaming market penetration rate for American consoles was 51 percent.

Still, a 20 percent penetration into China’s 2017 gaming market should come out to about 20 million units sold— a massive increase from the current number of sales.

According to Horn, the gap is the result of a ban on console gaming imposed by the Chinese government in 2000 in order to combat a problem of a youth gaming addiction. However, the Chinese government has since conditionally reversed its stance after the ban lasted longer than a decade.

Since 2014, foreign companies have been allowed to sell and manufacture consoles and games in China as long as they were able to pass the government content review process. Additionally, foreign companies must partner with a Chinese company that operates in a foreign-trade zone to bring its product to market.

As such, in 2013 Chinese tech company Baishitong partnered with Microsoft in order to form a joint venture to launch the Xbox One, the first Xbox console to be released in China. Sony followed suit shortly thereafter and worked with the Chinese group Dongfangmingzhu in order to introduce the PS4 to Chinese markets.

Rather than being too obsessed about the number of consoles sold in China, Xbox boss Phil Spencer said in an earlier interview that the best way to boost sales was to focus on delivering great games to Chinese gamers.

“As our game portfolio strengthens, so will the sales of Xbox consoles in China,” he said.