China, The Final Video Game Frontier

China, The Final Video Game Frontier

There has been a lot of talk about China in the world of gaming lately. Recently, Microsoft launched the Xbox One in Chinese territories, and managed to pull in 100,000 sales in only the first week. Now Sony is getting close to launching the PlayStation 4 in China as well. A recent government filing showed that a Sony-affiliated factory in Shanghai’s free trade zone plans to start packaging PlayStation consoles in December. Which PlayStation console is unclear, however, it seems likely that Sony would end up selling the PS4 in order to keep up with Microsoft’s Xbox One.

But why China? Why is this territory so hotly contested among the first party developers that shape our gaming landscape?

Well, there are a couple of reasons. Consoles were banned in China in the year 2000. Other than a host of knockoffs, which are quite hilarious if you look for them, Chinese territories had absolutely no access to real video game consoles like the Xbox and PlayStation.

This ban was lifted in September 2013, opening up the territories to console sales once again. This, of course, means Sony, Microsoft, and Nintendo have yet another territory to sell their product in, which boils down to more profit if their cards are played right. Microsoft was the first company to launch a console in Chinese territories following the lift of the ban, and so the Xbox One has a bit of a head start. While Sony has already announced plans to follow in Microsoft’s footsteps, Nintendo has not yet announced plans to market their products to a Chinese audience.

But that’s only part of the reason why game companies are interested in China. The other reason is the sheer size of the Chinese economy. China is one of the largest economies in the world right now and is still growing. Recently, China’s PPP (purchasing power parity) surpassed the U.S. and some economists are saying that China is set to surpass the United States as the world’s largest economy.

Granted, this doesn’t exactly mean that each individual Chinese citizen has more money than each American citizen. When you factor in China’s population and population density, that money is certainly more spread out. Even so, there is money flowing in Chinese territories and that money could be going to console developers. While we are unlikely to see numbers close to what we see in the U.S., even seeing numbers close to Japanese sales would be a big boost in profit, which according to the numbers we have seen so far is what we can expect.

China, The Final Video Game Frontier

Strangely enough, video games are not the first to try and get a piece of Chinese profits. The movie industry has been doing this for a long time. Ever wonder how some of the worst movies in the world still make money? This is a gross oversimplification but the answer is China. Look at Transformers 4 … actually on second thought don’t. Have a friend explain the plot of Transformers 4 to you so you can spare yourself the misery. In the last half of the movie the action shifts to China rather abruptly, a move that I will guarantee you was meant to pander to Chinese audiences.

Of course, I don’t actually mind this much–movies pander to markets all the time–but look back on some of the worst movies that still made a profit and you’ll notice an interesting pattern. Even if they aren’t directly pandering to Chinese audiences, you can look up the amount of money made in Chinese territories and see that profits there have kept many movie projects afloat. For more information on how movies have been using China as a profit buffer, check out this great Polygon article.

So what does this mean for the future of gaming? Right now, we aren’t sure. We will need to see how well consoles sell in Chinese territories. If our present day consoles are hacked easily, we might see a lot of unlicensed software like we did back in the Nintendo days. We may see software made specifically for Chinese sale which would be an interesting development for importers. “International” versions of software with multiple text and voice tracks may become more common. It also means that games might be able to do the same things movies are doing, using China to stay afloat. This would allow cult classics and non AAA titles to get sequels that otherwise may have never been greenlighted.

What do you think? Is the opening up of Chinese territories a good thing for games? Let us know in the comments.

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