Cracking the shell: What does China mean to the next-gen race

Although we’re but a shy three months into the next generation of console gaming, several trends have begun to take form. The most prominent of these trends, or at the very least the one that speaks the loudest, is that of sales. At 4.38 million units sold, the PlayStation 4 has built a sizeable lead of approximately 1.2 million units over the Xbox One. Of course, this is an early figure and one open to variance; there’s no guarantee that Sony will retain its lead going forward. Regardless, these numbers do ask the question of why the three systems hold the standings they do.

Beyond the obvious indicators of the popularity of the services and games offered on each system (which is likely the biggest factor) and price, an explanation can be found by looking at demographics—that is, the role of consumer countries thus far, and the impact of currently untapped markets. It’s surely no coincidence that PS4, the system with the larger of the two launch demographics (at 32 countries day one), has won an early victory, nor is it surprising that Microsoft is working to get the XOne available in every region it can as quickly as possible. But looking forward, apart from a few countries currently tied up with trade restrictions, there’s less room for a new market to influence the next-gen tide. All the big boys (US, EU, Japan, etc.) have either shown up or are next in line—except one. China.

Hong Kong, China.

We’re talking about the world’s most populous nation here—a nation with well over a billion people within its borders, the majority of whom are uninvolved with today’s console industry yet simultaneously heavily involved in mobile and PC gaming. It goes without saying that if any of the three console titans were to harness the Chinese market with even a shred of exclusivity in their arrangement, their system would receive a serious boon.

But that’s just the situation from a distance. The fact of the matter is that China is not necessarily the consumer goldmine it may appear on paper, especially where the games industry—specifically, game consoles—is concerned.

It’s no grand secret that video games often play the scapegoat and are blamed for an alleged and entirely unfounded negative influence on society. However, the majority of the world continues to allow and profit from interactive entertainment—an ethical contradiction that I’ll save for another article. China on the other hand has had a ban on game consoles in place since 2000, the reason for it being the aforementioned prophecy of corrupted youth. As you can easily imagine, this ban has severely impeded the console industry’s ability to enter China, leaving the Shanghai free-trade zone as the nation’s only entryway.

With that said, it’s not impossible for China to become a major player in the interactive entertainment game. A recent update on China’s Ministry of Culture (via Bloomberg) revealed that the nation is in the process of revisiting its heretofore iron-fisted policies on video games. Speaking on the nation’s revision, president of the Ministry Cai Wu said, “We want to open the window a crack to get some fresh air, but we still need a screen to block the flies and mosquitoes.”

It’s not a promise of undisturbed hordes of happy-go-lucky consoles frolicking unabated in a field of free enterprise, but any change is good change if the previous option is a flat no. Cai’s sentiments are more reassuring when paired with his previous comment on the situation—that the government shouldn’t “go beyond its duties to intervene in the commercial cultural market.”

Ultimately, the in-progress changes in China suggest that the nation and the potential market therein will graduate to viability in the grander scheme of the games industry. The news comes on the heels of Sony expressing interest in the “promising” Chinese market, in addition to Nintendo’s intent to look to capitalize on the free-trade zone in Shanghai.  With Microsoft’s partnership with BesTV, of Shanghai Media Group, confirming their interest in the Eastern market as well (albeit it potentially less gaming-centered), it’s clear that China could prove to be a pivotal demographic in the next-gen race.

How exactly it may do so is a less straightforward subject, however. It’s a promising opportunity to be sure, but Nintendo and Sony and Microsoft will be answering different questions as they navigate China. Sony’s interest in China is likely because the company now has an unprecedentedly large means of solidifying their Eastern influence, using their hold on Japan as a convenient go-between. Microsoft on the other hand may finally be able to do something in the East with China, their previous attempts to expand eastward all quashed by a combination of xenophobia, Sony’s popularity and poor product delivery.

Then there’s Nintendo, which stands to gain the most out of the alleged expansion. Expanding into China would benefit Sony and Microsoft greatly, but ultimately prove to be nothing more than a shot in the arm for two already succeeding consoles. Meanwhile, the Wii U is working to pick up every sale (and game) it can, meaning Chinese sales could catalyze a much-needed upswing for the system. What’s more, entering a new market means the $299.99 Wii U ($239.99 if you want to get finicky) will hold a simple but weighty cost advantage over its two competitors which would presumably hit shelves at the same time.

Here's hoping something like this comes along around that time.

In any case, hearsay is hearsay, and given the Chinese Ministry’s ironclad itinerary of releasing revised rules on video games “as soon as possible,” we shouldn’t expect Chinese-aimed promotional campaigns tomorrow.