Consoles in China

Recently the Chinese game site Gamecores did a couple of podcast interviews with the respective China heads of Xbox & Playstation. These podcasts are well worth a listen (if you speak Mandarin) not only because of the topic (how are the console platforms doing in China?), but also because of the insight into the people driving these businesses.

First, the two podcasts (btw, I thought this site is really well made):

After listening to both of these talks, I think the bull case for consoles in China can be summarized as follows:

• The analogy that consoles in China are like the domestic films market 10 years ago. Back then it was plagued by piracy and entry barriers – now the China film market is rapidly becoming a close rival to the US film market, and Hollywood has found many ways to achieve success in China
• The government stance towards consoles have shifted (and more importantly) been clarified, clearing the way for some amount of free enterprise in China by foreign console platform owners
• Both Microsoft & Sony have deep roots in the China market, they are committed to the opportunity, and they are throwing respectable talent at the console problem. Having not really looked at this space before, I gained a lot of respect for both companies and I think their China console heads are decently speaking the gamer language ¹

Meanwhile, the bear case for consoles in China, as usual, is focused on content:

• A substantial amount of the top tier AAA games will not get through the regulatory process to publish in China. Just this year, it’s hard for me to see The Witcher 3, Bloodborne or Metal Gear Solid V come through for either ideological or sex/violence reasons, and these are the 3 best games of the year so far IMO
• The “chicken & egg” problem of Chinese gamers’ willingness to pay upfront for gaming content. Soeda touched on this in his interview – to get high quality localization done, there needs to be confidence in sales; if sales are weak there will be fewer quality localized titles, which leads to lower supply and certainly lower sales
• Chinese family acceptance of gaming in the living-room. For years Chinese kids convinced their parents to buy them PCs, in the excuse of studying and learning the computer. There’s no such pretense with the console (although I remember Xbox tried to build a case for that with some of its demo videos at Chinajoy last year?)

Personally I’m rather bullish on consoles’ prospects in China. I think console gaming still represents an integral part of the core gamers’ experience and there will probably continue to be a fair amount of console exclusives that really define AAA single-player experiences (think The Last of Us). And with the advent of streaming platforms there is going to be higher awareness with the non-console gamers in China of the type of experiences that they are missing out on. ²

Lastly, I’m also reminded not only of the China film analogy, but also Apple in China. Going back 6 years, I lamented at the time that Apple’s app services are woefully inadequately localized and I mocked them for not “getting China”. Fast-forward to now and they’ve certainly solved many of the implementation problems. I see quite some similarities in the types of challenges that Microsoft / Sony faces compared to Apple, and thus I think those are solvable problems that just need time and consistent drive.