Yesterday, China's State Council decided to temporarily lift the sales and production ban on foreign game consoles in the region, according to a report by Reuters. This means that for the first time ever, major console vendors Nintendo, Microsoft, and Sony have the chance to sell their wares in China. The new rules require that products sold domestically in China be manufactured in the all-new Free trade Zone in Shanghai, China.
China banned the sale of games and game consoles in 2000, with Chinese officials being worried about violent and questionable content. Residents in the region have had to turn to grey market retail stores or cheap knock-offs to get their gaming fix. As an example of the latter idea, a Nintendo Wii knock-off called the JungleTac Sport Vii was released in 2007.
China's been toying with the idea of letting foreign companies products into the country legally, but in the meantime vendors like Nintendo and Microsoft have resorted to partnerships with Chinese companies. The Nintendo 3DS XL is sold in China as the iQue 3DS XL. Same product, but Nintendo can't sell it in the region, so they've turned to another company for help. World of Warcraft is sold in China with significant changes and the game is operated by NetEase, not Blizzard. In September of last year, Microsoft announced a partnership with Chinese internet TV company BesTV to develop "family games and related services," but there was no word on bringing the Xbox brand to China.
With the establishment of the Free Trade Zone in Shanghai, the nation looks to be more open to competition from outside its borders. Unfortunately, there's still a few barriers to entry. One, companies need an approved permit from the Chinese government to operate in the FTZ. Two, the Chinese game market is currently focused away from consoles and towards free-to-play PC gaming and mobile devices.
According to a Games in Asia translation of a Chinese firm's report, the game industry revenue for China was $13.75 billion (83.17 billion Chinese yuan) in 2013. Of that total, around $15 million was for console games. $7.8 billion of that total is Chinese-developed gaming experiences. So the market is completely fresh in the region and relatively open for home consoles once they hurdle the red tape, but there's no guarantee that Chinese gamers want home consoles. The situation may turn out like Microsoft's repeated attempts to launch Xbox consoles in Japan.
Finally, there's no guarantee the ban will remain lifted. This is only a temporary measure, not a permanent change, so Sony, Microsoft, and Nintendo are still feeling out the situation. The rules are hazy and could be replaced or changed at any time. All games and consoles have to be vetted by Chinese authorities, but manufacturers currently don't know all the ins-and-outs.
"The fact that consoles and most probably individual games will have to go through an approvement process could give the government a bigger stick to regulate console and console game sales," Newzoo CEO Peter Warman told the New York Times.
"We recognize that China is a promising market, and we are studying developments there, but at this point we cannot comment further," said Sony Computer Entertainment spokesperson Satoshi Nakajima added in a statement.