Close
Report Comment to a Moderator Our Moderators review all comments for abusive and offensive language, and ensure comments are from Verified Users only.
Please report a comment only if you feel it requires our urgent attention.
I understand, report it. Cancel

China's grey market console base "2-3 million units"

Tue 06 Oct 2009 7:00am GMT / 3:00am EDT / 12:00am PDT
Emerging MarketsHardware

Niko Partners' Lisa Hanson explains why living room platforms should be legalised

The grey market in China for consoles - including PlayStation 2, PlayStation 3, Xbox, Xbox 360, Wii and GameCube - stands at an installed base of around 2-3 million units, according to Niko Partners' managing partner Lisa Hanson.

Of those hardware platforms it was estimated that around 750,000 Wiis were brought into the country unofficially last year, alongside around 625,000 Xbox 360s - which all adds up to a lot of lost revenue for the platform holders and Chinese government alike, with the latter a good reason for consoles to become legal in the country.

"Well there are about 2-3 million units sold illegally at full market prices now for consoles - and those people have to seek them out," she told GamesIndustry.biz during an interview at this year's Games Convention Asia in Singapore.

"PS2, PS3, Xbox, Xbox 360, Nintendo Wii, GameCube... it all exists. The PS2 is very popular because there are so many games available for it that are pirated," she continued. "PS3 is less popular because it's more expensive and it's more difficult to get the pirated games, but Wii outpaced PS2 last year - I think we estimated 750,000 Wiis were sold in 2008, along with 625,000 Xbox 360s.

"This is all lost revenue for Microsoft and Nintendo, and it's also lost tax revenue for the Chinese government. And more importantly to the Chinese government it's a loss of control of the content - so it's really in their best interests to get out the stick."

Niko Partners believes that the market in China - predominantly PC online gaming - will be worth USD 3.65 billion this year, and will rise to USD 8.8 billion by 2013 as the number of online gamers jumps from 60 million to 100 million in that time frame, but even that estimate is based on slowing growth in that time.

"On a compound growth rate it's only about 19 per cent, and we've had huge growth over the last few years," she explained. "2008 over 2007 was something like 73 per cent, and the year before that was about 70 per cent. This year versus last year it's about 35 per cent growth - and that's with World of Warcraft being offline for a while.

"As we have slowing growth, basically to keep our forecast reasonable we're pulling down the growth as much as we can. By 2013 we're sub-20 per cent for the revenue growth, but we still have this big boom in internet users. So the sub-segment of total internet users who will be gamers is about 100 million."

The full interview with Lisa Hanson, in which she also explains why China is a crucial market for Blizzard with World of Warcraft, is available now.

3 Comments

Antony Cain Lecturer, Wakefield College

263 21 0.1
"will be worth USD 3.65 billion this year, and will rise to USD billion by 2013"

Missing a figure before the 2nd billion

Posted:5 years ago

#1

Phil Elliott Project Leader, Collective; Head of Community (Live Team), Square Enix

163 29 0.2
Thanks - fixed now!

Posted:5 years ago

#2

Mat Bettinson Business Development Manager, Tantalus Media

97 0 0.0
Hrm, while it's true China would see tax revenue by allowing the sale of videogame consoles, I think it's questionable that the first parties would even be interested in launching the consoles officially in China surely?

As we know Sony and Microsoft take a hit on selling hardware. Ultimately there's no will to enforce copyright issues inside of China. Unless you're ripping off something locally produced, eg. partially or fully state-owned company products, the will to enforce just isn't there.

Which means unless the first parties want to sell original software for a pittance (like WoW subscription fees in China) versus the cost elsewhere in the world, the chances of a genuine software market appearing are pretty slim. So if you can't recoup your loss leading on hardware, why launch in the country at all? Nintendo as it stands (who does make money off hardware) has long viewed China as a thorn in its side.

For that reason I don't buy Niko's argument that legalisation of consoles in China would produce the market they say it would do.

Likely wider availability in China (ignoring the import duty issue) would amplify that scenario. There might even be a good argument for restricting the availability of hardware in Hong Kong since blatantly most of it ends up going straight to the black market modding scene locally and exported into mainland China.

The first parties must have some sort of idea of the scale of legitimate sales by looking at the volume of real software sold in the Hong Kong domestic market?

Posted:5 years ago

#3

Login or register to post

Take part in the GamesIndustry community

Register now