China officially lifted its 14-year-old ban on selling foreign-made video game consoles on Tuesday, confirming months-long rumors that the likes of Sony, Microsoft, and Nintendo are once again welcome to its nearly $14 billion gaming industry. For now.
According to Reuters, officials did not submit decision details or clarify the length of the suspension. All we know is that "foreign-invested enterprises" can now manufacture in Shanghai and sell their products in China once they've been approved by cultural departments. But it's likely that the ban's removal won't actually matter all that much.
In 2000, officials said that foreign manufacturers would be (mostly) barred from selling in China because video games and arcades were seen as "seriously harming the healthy growth of youngsters," Engadget reports. The regulation that applies to non-Chinese customers is as follows, per Engadget:
The manufacturing and selling of any electronic gaming equipment plus its parts and accessories headed to China are stopped immediately. No company or individual can partake in the manufacturing and selling of electronic gaming equipment plus its parts and accessories headed to China... With the exception of processing trade, the import of electronic game equipment plus its parts and accessories through other forms of trade is strictly limited.
This is kind of a silly reason to ban gaming consoles, rather than games. If the ban was really supposed to prevent young people from being exposed to harmful agents, it didn't work. Kids (and adults) can and do access games online, or play pirated versions of console-specific games, and regular PC games are everywhere. A grey market for foreign-made consoles exists, and Sony launched Playstation 2 in China in 2004 despite the ban.
But even though the Japanese company was able to work around the legislation, the product fell flat. According to Kotaku, American and Japanese companies may have bigger problems than any official regulation: Counterfeiting.
Piracy... is doing more to keep game consoles out of China than any government edict ever could. Sony released the PlayStation 2 in China in January 2004. The launch was a disaster with rampant game piracy and of the hardware itself. While it wasn't exactly the financial success Sony might have been hoping for, it did build a brand name for the company. Nintendo's Wii has been copied by a Chinese company and released as the "Vii", a game system that runs preloaded motion controlled games. Sony's PS3 has been knocked off as "The Winner." Pirated versions of console and PC games are prevalent.
And home-made games aren't necessarily better for young Chinese minds. Consider, for example, this computer game that allows players to tase corrupt government officials. Techinasia reports:
In the game you have a tazer and have to zap the corrupt officials that pop up – whack-a-mole style – without hitting the police officers that also pop up in the eight prison windows. There’ll be 100 people popping up in each round, and you have to score as much as possible. You lose 100 points for zapping a policeman.
Admittedly, the pro-police, anti-graft message does echo the party line pretty closely. Still, we think a government taser game is not exactly what officials had in mind when they tried to curb gaming culture.
Reuters adds that Chinese consumers may not be interested in paying for gaming consoles. Not only are pirated versions of console-specific games available, but Chinese gamers are used to playing games on their computers. PC games dominate the market with a nearly two-thirds share, while browser games and mobile games nabbed 15 percent and 14 percent of the market, respectively. Plus, it's significantly cheaper to play on browsers, mobile devices and personal computers than on consoles. And, according to Reuters, most Chinese gamers simply will not be able to afford the new toys:
More than 70 percent of Chinese gamers earn less than 4,000 yuan ($634) a month, according to Hong Kong-based brokerage CLSA. The new Xbox One sells for nearly $500 in the United States, while Sony's PlayStation 4 goes for just shy of $400. New games for each console cost around $60. "To purchase a game at 200 or 300 yuan ($33 or $50) is unbearable or unthinkable for a normal player like me," said Yang Anqi, a 23-year-old student at Beijing's Renmin University who has played video games for more than a decade.
Microsoft, Nintendo, and Sony won't be able to turn to the nostalgia-based customer loyalty they have developed in the United States. To win over new Chinese consumers, it'll have to be a bit more creative than that.