Console makers seen playing a losing game in China
With mainland games fans spoilt by piracy, the lifting of a ban on consoles is unlikely to make winners of the industry big names that have been shut out of the action
For the past five years, Zhang Yang has sold Xboxes, Wiis and PlayStations at his Beijing shop, but the merchant is a thorn in the side of video game console makers now allowed into the world's third-biggest market.
The consoles that Zhang sells are smuggled into the mainland because they are illegal, although that may change after the government lifted a 14-year-old ban on the devices this week.
But most have been modified, or "cracked", to play pirated games that can sell for less than 10 yuan (HK$12.60) compared with US$60 for the latest licensed titles.
The proliferation of these bootlegged games, along with the mainland's reputation for weak intellectual property rights, means console makers Microsoft, Sony Corp and Nintendo will lose out on lucrative royalties from software sales.
Combine that with the fact that most Chinese gamers prefer to play free games on their PCs and mobiles anyway, and the decision to lift the ban on console sales presents a challenge, rather than a big opportunity.
Vendors will need … a business model for a piracy-rich environment
"Console vendors will need to incorporate a business model for a piracy-rich environment," said Lisa Hanson, a US-based managing director at Niko Partners, a research firm focused on the Asian games market.