China’s weak game console ban to become even more non-existent

China’s weak game console ban to become even more non-existent

Reports are coming out today that China has created a new free trade zone in Shanghai that will apparently lift China's game console ban and open the doors to console manufacturers to sell their wares throughout the country. 

The so-called “game console ban” is a bit of a misnomer, however, as it only seems to apply to Sony, Microsoft, and Nintendo's TV-based consoles.

Numerous Chinese companies sell TV-based gaming machines that skirt around the ban simply by including features that give them a slightly different classification. Beyond that, game consoles have long been bought and sold in China on the so-called gray market. Which is to say, in open daylight in legitimate stores. 

“I’ve stood in a bank lobby [in China] where the promotion for opening a new checking account is a new Wii,” Lisa Hanson, founder of a market research firm focused on the Asian game sector, told me in January in an article for “Not even banks know that this is illegal.”

The “ban” seems to be less about keeping consoles out of China, and more about pushing outside companies to establish partnerships with Chinese firms before entering the country.

Nintendo, for instance, has been selling the 3DS in China since 2012 through a partnership with local company iQue. They've also sold the Nintendo DS, DSi, DS Lite, Game Boy Advance, Advance SP, Game Boy Micro, and the Nintendo 64 in China through the same partnership. 

The lift of the ban may be a symbolic gesture inviting companies into China, but Lisa Hanson stressed that it's still a dangerous venture without the right business strategy. The main problem is that you can't really sell packaged games there.

Hanson told me that the need to pass products through government censors and licensors means that the pirated versions of games are almost always on the streets before the official version is released, which takes a big bite out of sales.

The next generation consoles are well set up for free-to-play games which could do well in the Chinese market, but it remains to be seen whether Chinese gamers will actually care. Why should they pay a big block of money for a game console to play a smaller pool of games than they can play on the PCs they already use?

What's more, those in China who love console games can already acquire these consoles from places like Hong Kong, or local gray market retailers. In a way, console manufacturers are already reaching their Chinese customers.

The Chinese gaming culture and business is heavily built around the PC and it will take a lot more than the lifting of this ban to change that.