In the global video game industry, the United States dominates in terms of money. The video game industry generated approximately $50 billion in 2012 and last year, $18 billion of that came from the United States. The US’ dominance, however, won’t last forever as more and more countries begin to spend more time and money on video games. China is growing at an exponential pace. Something that has kept the US gaming industry generating more revenue than China is the console industry. Video game consoles like the Xbox 360 and PlayStation 3, as well as the retail games they play, generate huge sales revenue every year, but consoles are banned in China and have been since 2000. That’s about to change, though.
“We are reviewing the policy and have conducted some surveys and held discussions with other ministries on the possibility of opening up the game console market,” a source within the Chinese Ministry of Culture told China Daily, “However, since the ban was issued by seven ministries more than a decade ago, we will need approval from all parties to lift it.”
Game consoles were banned in China on the grounds that they corrupted young people. Within five years of the ban though, the online gaming boom swept through China, making MMOs like World of Warcraft huge business. Video game companies like Tencent have helped to expand China’s online gaming base, and online games currently make up nearly 90-percent of all gaming revenue in China.
The entire Chinese gaming industry generated nearly $10 billion in 2012.
“China now has more online gamers than the US and, I believe, Japan combined,” said Tencent VP David Wallerstein in 2012, “[This] year, the Chinese online game market will be about $8 billion, and the global market for online games is about $15 billion. So it’s roughly half.”
Wallerstein’s estimate actually ended up being about a billion dollars low, and the trend is expected to continue. By 2017, the Chinese gaming market is expected to reach $21.7 billion by 2017.
Numerous video game companies have tried to move past the ban. Sony even gained legal approval to release the PlayStation 2 in the country back in 2003, later giving it a limited run in 2004. Unfortunately for Sony, the console was a catastrophic failure as hardware and software pirates flooded the market. Other companies have found loopholes in the ban. Lenovo’s Eedoo CT510, a Kinect-style motion control game console, was sold as an “exercise console.”
Who will tackle the Chinese game console market first? Sony may try its hand again. In November the Japanese manufacturer was granted a “China Cumpulsory Certificate” that is valid through 2016, a necessary certification for imported products like the PlayStation 3. With the next generation of consoles on the way though, manufacturers like Sony, as well as Nintendo and Microsoft, are likely lobbying for permission to sell their consoles in the People’s Republic. OF course, if the ban is completely lifted, that could also clear the way for another console manufactured by one of the many Chinese gaming companies operating in China.