Back in June of 2000, the Chinese state council saw fit to pass a bill that “strictly limited” the import of game consoles in the region. Specifically, several administrations within China were concerned with the lasting effects video games, Internet cafes, and video arcades had on China’s developing youth. The seven ministries, which include the Ministry of Culture, the State Economic and Trade Commission, the Ministry of Public Security, the Ministry of Industry and IT, the Ministry of Foreign Trade and Economic Cooperation, the General Administration of Customs, and the State Administration of Industry and Commerce contributed to the bill.
While not ‘completely’ banning all video game efforts, the bill covered extensive guidelines on gaming in China. China’s guidelines on gaming included safety requirements, opening hours for gaming cafes, restrictions on playable content, as well business related computer gaming. As China attempted to protect its youth from dangerous gaming venues and adult content in gaming, console makers saw the particular language that all but prohibited their presence in the region.
"As of the day this report is released, the manufacturing and selling of any electronic gaming equipment plus its parts and accessories headed to China are stopped immediately. No company or individual can partake in the manufacturing and selling of electronic gaming equipment plus its parts and accessories headed to China. With the exception of processing trade, the import of electronic game equipment plus its parts and accessories through other forms of trade is strictly limited."
Fortunately, China’s 15-year restrictive policies are being reevaluated. As of this weekend, the State Council of the People’s Republic of China will reportedly allow consoles to be manufactured and distributed throughout all of China. Previously, China only allowed video game consoles to be manufactured within the Shanghai Free Trade Zone as part of a temporary measure introduced last year.
With China officially loosening its policies on when and where game console manufactures can manufacture hardware it comes as good news for video game console companies. Microsoft’s Xbox division now has an opportunity to see growth outside of it traditional profit sectors in the U.S. and U.K. At the time of the announcement, Microsoft’s shares rose an additional 1%.
What does this mean for Microsoft and the Xbox One?
Perhaps not a whole lot as far as consoles are concerned. Part of China’s restrictive nature gave birth to an underbelly of illegally imported console sales. For gamers who were actively interested in gaming on both the Xbox and PlayStation did so by purchasing consoles imported from Hong Kong or Guangzhou and other places at international prices.
During the experimental Shanghai Trade Zone agreement, Microsoft's Xbox One got off to a slow start. This may be in part, due to the price at launch or other regional occurrences, but the Xbox One was reported to have stalled at only 100,000 pre-orders in China. In addition to the Xbox One not doing so hot in China, China’s online PC gaming saw a massive uptick in acceptance. With the iPhone being a sought after commodity as well as Android’s expansive reach, casual gaming will also have an impact on how the Xbox One and console gaming, in general, does in China.
Unfortunately for both Microsoft and Sony, it will be game developers who determine the sales of consoles in the region. According to a report from Forbes, "gamers play console games in single-player or local multiplayer mode only because they cannot connect to PlayStation Network or Xbox Live in China unless they go through servers in Hong Kong, and that gets very convoluted.”
As of now, opening up more of China to consoles could net Microsoft a few more console sales for next quarter. However, Microsoft and game developers will need to retool and tailor the games and services to have staying power throughout the country.
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