Censorship, Prices, and Pirating Strangle Chinese Console Gaming Market

While Sony and Microsoft debuted their PlayStation 4 and Xbox One consoles in China within the past year, only 9 million out of China’s 515 million gamers use a console. Due to content censorship, prices, and pirating, Sony and Microsoft are expected to sell less than 550,000 consoles, combined, this year, with online PC and mobile games expected to haul in $16.8 and 4 billion, respectively.

This is not so surprising given that the 1990s-2000s growth of Chinese gaming took place with computer gaming in Internet cafés. These locations provide gamers with convenient interaction with like-minded people and a speedy Internet connection, which many do not possess at home. Furthermore, from 2000 until January 2014, the Chinese government prohibited foreign companies like Sony and Microsoft to sell their consoles in the country because of a perceived negative influence on children. When the Xbox One finally went on sale in September 2014, only 10 games were actually available for purchase.

Content censorship has historically been an issue for the gaming industry in China. This is due to the Ministry of Culture (MOC) and the General Administration of Print and Publication (GAPP), China’s dual gatekeepers for cultural products. In order for corporations to release their products, they must obtain approval from not one, but both gatekeepers. Games that really seek approval diminish the realness of objectionable content by, for example, recoloring red blood as black or purple and substituting sand bags or tombstones for skeletons.

Such regulation has led to hypocrisy in the past, such as in 2009, when only one out of the two ministries approved World of Warcraft’s operation in China. When the game opened its servers with approval from only the MOC, the GAPP ordered it to shut down and threatened to revoke the publisher’s Internet access.

In response to this scandal, as well as World of Warcraft’s licensing war, overt advertising of pay-to-play features, and government efforts made to convince parents that their addicted children needed electric shock therapy, Chinese gamers created an in-game satire called War of Internet Addiction.

Regulation from these ministries prevents extremely popular franchises like Grand Theft Auto and Halo from entering China. But price is another gatekeeper: the least expensive PlayStation 4 and Xbox One consoles are sold in China for $460 and $480, respectively. This is problematic, considering 70% of Chinese gamers earn below $645 each month. Additionally, mobile gaming remains China’s quickest-growing slice of the industry, and smart TVs, allowing gamers to play Android mobile titles on TV, have entered the market.

Pirating also decreases Chinese gamers’ desire to purchase consoles and games. Chinese players can download major triple-A titles for nothing or next to it on computers. Digital World Research analyst and founder P.J. McNealy states that “many consumers in China have been trained that the value of intellectual property is very low. Instead of a Blu-ray for $20, you can get a disc that has 5 movies on it for a dollar. If you’re Nintendo or Microsoft or Sony, the challenge to compete against free is brutal.”

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