Following the Chinese government's lifting of a 14-year-old ban on gaming consoles, Microsoft announced Tuesday, April 29, that it will begin selling the Xbox One in China in September through a partnership with BesTV New Media.
This will provide Microsoft a much-needed expansion opportunity to get ahead of the competition. In 2013, the Chinese gaming industry saw a massive increase of up to 38% as gamers spent roughly $13 million playing on PC, mobile and online games inside Internet cafés. Nearly 500 million, or one-third of the entire Chinese population, are avid gamers.
Microsoft partnered with BesTV, a Chinese Internet TV company, to form E-Home Entertainment, which will sell the Xbox consoles as well as E-Home PC devices through the Shanghai Free Trade Zone. Developers will also be able to sell their games in the Chinese market through E-Home Entertainment.
"This is a historic moment in our partnership as we work toward the first official Xbox launch in China. Xbox One will also be the first system of its kind in China," says Yusuf Mehdi, corporate vice president of marketing, strategy and business for Microsoft.
"Launching Xbox One in China is a significant milestone for us and the industry, and it's a step forward in our vision to deliver the best games and entertainment experiences to more fans around the world," he adds.
In 2000, the Chinese government banned gaming consoles because it believed they posed a distraction to children. Unlike PCs, consoles were said to have no educational value for children. However, Mehdi notes that Xbox One offers games and entertainment while also promoting online education and fitness.
The Chinese government still has restrictions on games allowed in China, though. For example, it censors games that "violate China's constitution" and "promote obscenity, drug use, violence or gambling." It also prohibits titles that are purported to "harm the nation's reputation, security or interest" and "violate China's policy on religion by promoting cults or superstitions."
Microsoft is the second consumer electronics company after Apple to wade into the massive Chinese market, which is progressively opening up to western providers. Analysts believe this is the perfect time to turn to China for companies wishing to expand their reach.
Last year, China outranked the United States as the biggest market for TVs. It is no surprise, therefore, if gaming consoles will also make a splash in a country with a population getting bigger and more affluent.
"If you are launching a global entertainment console, you should launch in China," says PJ McNealy, analyst at Digital World Research.
"I don't expect sales fireworks at launch, but with its partner BesTV, which has access to local content, a large addressable market of existing IPTV users as well as marketing and distribution expertise, Microsoft is giving itself a good opportunity to gain some advantage over both Sony and Nintendo," pipes in another analyst, Piers Harding-Rolls of HIS Technology.
Microsoft is lagging behind Sony in gaming consoles. During the first quarter of 2014, Microsoft sold four million Xbox One consoles, while Sony shipped seven million units of its PlayStation 4.
Microsoft will also be selling the Xbox One in Japan also in September.
