News sources have confirmed that China has opened its gates for the foreign companies operating in the gaming console space after 14 long years of ban on foreign entry into the Nation. This has created a potential market for the international players such as Sony (SNE, Financial) and Microsoft (MSFT, Financial) who have been engaged in a throat-cut competition in the gaming console industry for ages now. While Sony’s PlayStation is declared to be a sure hit, Microsoft’s Xbox has also been able to garner reamarkable market share since its initial launch. Let’s dig deeper into the article and find out how the political environment in China is turning friendly to foreign players in the industry and what such an easy entry into China could mean for these two rivals in the international market.
The gaming console industry yet to expand its wings in China
In early 2014, Chinese government announced the opening of the gaming consoles in the Nation that had been banned for around 14 years, but also declared some strict guidelines to be followed to do business in China.
Such a major market move encouraged contenders such as Sony and Microsoft to enter the market and tie up with local game developers to sell their games in the region as per the set rules in China.
Microsoft enjoys the first mover advantage as it first placed its foot into China and Sony followed the former’s footsteps to gain entry into the huge Chinese market which is dominated by online games and where gaming consoles are sold at a lower rate – but with foreign players evading the gaming industry the console sales is estimated to grow phenomenally in the country.
Microsoft and Sony in China
When Microsoft launched the Xbox One in September last year in China, it sold nearly 100,000 gaming consoles in the first wave of the release, which did position it on the top selling list in Chinese gaming console market. Soon after, Sony released the PlayStation 4 for the Chinese buyers intensifying the rivalry it has with Microsoft in the gaming industry.
Sony obviously enjoys a price advantage over Microsoft, as Microsoft’s Xbox One is priced much higher than what it costs in the U.S. The device is priced nearly $600 in China, while its about half the price at $399 in the U.S. Meanwhile, Sony has been clever to price its PlayStation 4 at around $468 in China taking lead of the current situation.
Sony has gone ahead to debut its cloud-based TV service, PlayStation Vue, which would provide 50 million people with the PlayStation Network to view their favourite programming like NBC Universal, CBS, Fox and Viacom live. Though the new TV service is under testing phase in New York, it is expected that Sony will launch its latest service in China to expand its market share in China.
Meanwhile, Microsoft is planning to tie-up with BesTV News Media Co., a subsidiary of the Shanghai Media group, to develop “family games and related services” for an investment of $240 million. As the Chinese government has objection to violent games being released in China, this measure being taken by Microsoft clearly indicates the attention being given by the company to the cultural sensitivity of China.
Final thoughts
With the gaming console market opening up in China, both the companies are using their management tactics to grow larger and improve their top line in the country. But there is one concern which needs to be addressed, and that is the rising popularity of cheap local online games in China. However, both the gaming console giants know how to add spice to their marketing efforts in the nation to gain significant prominence in China. So, let’s keep an eye on how these two rivals are able to improve their market share in the gaming console market in China which is flocked by several local players.
