Updated: 01/08/2014 21:57 | By Agence France-Presse

China drops game console sales ban, with conditions

China has formally authorised the domestic sale of game consoles made in Shanghai's new free trade zone (FTZ), potentially opening its lucrative market to the likes of Sony's PlayStation and Microsoft's Xbox.


China drops game console sales ban, with conditions

A vendor sells game consoles including Xbox One and Sony's PS4, which they say enter China through unofficial channels, in a major electronics market in Shanghai on January 8, 2014

The move effectively lifts a ban lasting more than a decade on domestic console sales -- even though imports remain officially blocked, while illicit machines are already widely available.

Foreign firms will be allowed to make machines in the free-trade zone and sell the equipment into the domestic market after passing inspection by cultural authorities, the State Council, or cabinet, said in a document dated December 21 but publicly released this week.

But commentators point out that consumers are unlikely to want to pay high prices for consoles and authorised software, especially if it is slow coming to the market. 

On China's largest online marketplace Taobao, some grey-market vendors were offering Microsoft's new Xbox One for around $656 and Sony's PS4 for about $566 on Wednesday.

By comparison, the Xbox One debuted at $500 in the United States in late November while the PS4 was priced at $400.

But the machines already available in China -- which enter the market through unofficial channels -- can play pirated games that cost very little.

"It’s impossible that game consoles will become big sellers, as they are relatively niche products in China. Authentic game consoles are usually expensive and nobody will purchase them except a few fanatical players," Yang Jiaxiang, an independent game design consultant, told AFP.

"They (companies) need government approval to issue game software in China, so they won’t be able to keep updates up to speed unless China reforms its approval mechanism," he added.

The State Council has "temporarily" suspended a ban on consoles introduced in June 2000. The government said at the time the games had an adverse effect on the mental health of young people.

A plan it released in September shortly before the FTZ's founding included a similar move.

The latest document, among a series of measures regarding foreign investment approvals for the FTZ, said cultural authorities must still formulate "related regulations" to allow sales. 

Some foreign industry officials fear that such regulatory approval -- conceivably to censor game content which China deems too violent, obscene or politically sensitive -- could be used as a potential trade barrier.

The relaxation does not apply to imported game consoles but only those manufactured in the FTZ, according to the guidelines announced so far.

No such machines exist as yet, but the move could potentially give foreign companies such as Microsoft of the United States and Japan's Sony and Nintendo -- maker of the Wii -- greater inroads into China.

Nintendo shares closed up 10.76 percent in Tokyo on Wednesday, while Sony added 1.38 percent.

The move was a "positive development for Sony and Nintendo, as China is potentially a huge market", said Hirokazu Hamamura, managing director of Kadokawa Corp, which publishes Japanese video game industry magazine Famitsu.

China's game revenue jumped 38 percent year-on-year to 83.2 billion yuan ($13.7 billion) in 2013, according to one industry estimate, although the market was dominated by online computer games. 

Games played on mobile devices are also growing in popularity.

But the two Japanese companies were cautious.

Sony Computer Entertainment sees China as a promising market, a spokesman said. "But as of today, there is nothing we can say for sure about our future plans in China," he added.

A spokeswoman for Nintendo, whose game brands include Donkey Kong and Super Mario, said the company was studying the new rules.

Microsoft is planning a $237 million joint venture in the FTZ to make home entertainment equipment, its Chinese partner BesTV New Media has already announced without specifying products.

China's Ministry of Industry and Information Technology this week also detailed measures further opening the telecommunications sector in the FTZ following a State Council pledge to liberalise so-called "value-added" telecom services.

Foreign investors will be able to offer new services in the FTZ, including call centres, multi-party communications and Internet access, the ministry said Tuesday.

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