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The increase of competition in the next-gen wars pushes Microsoft to the Chinese market

Microsoft seems to be doing whatever it can to beat out its competitors, and what better idea than to expand its overseas market.  Microsoft has been discussing its launch of its next generation gaming console, Xbox 360, in China.  Reuters reorts the software giant has been in talks with local Internet service providers and personal computer manufacturers about the launch of the console since late last year, but has not released any information of launch dates, as of yet. 

With China's online population reaching 132 million users, Microsoft has the opportunity to boost its sales with the Xbox 360 and the Xbox Live service.  Microsoft currently holds 5 million Xbox live subscibers, with a projected goal of 6 million subscibers by mid-2007.

Microsoft will also be checking with the Chinese government, including culture and information ministries, to acquire approval of games to be released.  The government will have to review to the game content which will ultimately have the last say if the 360 can launch in China.

"We take a long-term approach to each market and continue to evaluate the China market for opportunities," Andres Vejarano, Regional Marketing Director at Microsoft's Entertainment & Devices Division for Asia & Greater China, stated to Reuters.  With China's affluent members of society growing in numbers, the market for higher priced videogame consoles continues to expand.

Microsofts biggest competition in China is Sony's Playstation 2.  The PS2 is cheap and was already launched in China three years ago.  The advantage for Microsoft is the demand for a larger online gaming market which the Xbox Live service can provide. 

With the launch of its next-gen console in China, Microsoft is also looking towards opening up China's software development market, already setting up developing teams there.

Though there are obvious benefits with this launch, Microsoft will have to deal with the nation with the highest piracy rate under the U.S. priority watch list.  China has already had to shut down numerous websites run by piracy rings in early 2006, and has stood at a 90% piracy rate across all copyright industries since 2005.

Microsoft has not released any information on when they will lauch their console in China, but speculation from analysts suggests sometime late this year. Also, no launching price has been established either.

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Risk vs Reward.
By VooDooAddict on 1/16/2007 9:23:30 PM , Rating: 2
Risk ... Chinese will create/boost the 360 bootleg game market.

Reward ... Large potential market. (132 million online users / average family size, Then Shave off the top 5-10% to afford a console ... still a big market.)




RE: Risk vs Reward.
By allst1 on 1/16/2007 9:59:36 PM , Rating: 2
Not to mention piracy, which is already rampant in most of the developing nations, but there's still going to be that good old Chinese censorship. I can see Dead or Alive "X360" with animated sexiness causing some sort of out roar with the ministry. Babe flashing polygons, ban them!!

Anyone have figures on the average Chinese $$ income compared with the rest of the world?


RE: Risk vs Reward.
By KristopherKubicki (blog) on 1/16/2007 10:04:05 PM , Rating: 3
quote:
I can see Dead or Alive "X360" with animated sexiness causing some sort of out roar with the ministry.

Censorship in China is mostly limited to political and religious subjects.


RE: Risk vs Reward.
By allst1 on 1/16/2007 10:37:49 PM , Rating: 2
According to wikipedia: "Gamers who spend more than five hours will have the abilities of their in-game character severely limited. Players will be forced to take a five-hour break before they can return to a game with the character back to full capacity. In some cases further playing is locked down through their IP identification number or account with the online game vendor."

http://en.wikipedia.org/wiki/Video_game_controvers...

It's still there though :(


RE: Risk vs Reward.
By Le Québécois on 1/16/2007 11:06:22 PM , Rating: 2
quote:
Through new laws the Chinese government has said it plans to restrict gamers to three hours of consecutive play, using a “fatigue technique” in games. Children and teenagers are strongly encouraged to play online games only 3 hours per day through this method. After 3 hours their character abilities will be limited. Gamers who spend more than five hours...


Next time please quote correctly since this law is only for minors. At first it was supposed to be for everyone but they changed it so that adults can play like they want.


RE: Risk vs Reward.
By BladeVenom on 1/17/2007 12:17:27 AM , Rating: 2
They also censor obscenity and pornography.


RE: Risk vs Reward.
By Le Québécois on 1/16/2007 10:58:56 PM , Rating: 2
quote:
Anyone have figures on the average Chinese $$ income ...


If I remember correctly, the average income per person was, in 2003, 1250$ USD for urban regions (let's face it, peasants won't be the one buying a Xbox360).


RE: Risk vs Reward.
By KristopherKubicki (blog) on 1/16/2007 11:31:37 PM , Rating: 2
quote:
If I remember correctly, the average income per person was, in 2003, 1250$ USD for urban regions (let's face it, peasants won't be the one buying a Xbox360).


In 2005 that was the median income of everybody in the country (according to Wikipedia and the CIA factbook). The people I converse with regularly in China (college grad corporate underlings) all make at least 30-40k. I'm guessing that's who this is targetted at.


RE: Risk vs Reward.
By Le Québécois on 1/17/2007 12:09:13 AM , Rating: 2
quote:
In 2005 that was the median income of everybody in the country


That would make sense since China's economy is growing so rapidly.

quote:
The people I converse with regularly in China (college grad corporate underlings) all make at least 30-40k. I'm guessing that's who this is targetted at.


That would be my guess too. If Microsoft can reach only about 0.5% or so of China's population with the X360 it would still be very profitable for them.


RE: Risk vs Reward.
By borowki on 1/17/2007 12:01:01 AM , Rating: 3
Average figures for China are sort of useless, since the population is so large. It's a bit like using the world average income: the average person on this planet can't afford a Xbox 360 either.

As others have noted, income distribution is highly uneven in China. The GDP per capita in Guangdong is over $3000. In the capital Guangzhou it's over $11000. At purchasing power parity, that's getting pretty close to the level in the developed world.

There are definitely enough people there who could afford the console. The problem, as always, is games. The chance of Gears of War getting past the censor is probably zero. Viva Pinata could do well though--if they manage to explain to the Chinese what a pinata is.


Does it make sense?
By knitecrow on 1/16/2007 9:57:33 PM , Rating: 2
Can the average Chinese even afford the xbox 360? I suspect sales will be limited to the affluent few.




RE: Does it make sense?
By KristopherKubicki (blog) on 1/16/2007 10:00:47 PM , Rating: 2
quote:
Can the average Chinese even afford the xbox 360? I suspect sales will be limited to the affluent few.

There is a fairly large disparity of weath in China. In the cities like Shanghai or Shenzhen the white collar industry is booming at an incredible rate.


RE: Does it make sense?
By allst1 on 1/16/2007 10:19:54 PM , Rating: 2
Yea you'd figure that Microsoft did their homework, on the market potential. Anyways why did they launch so late? Is it only with China having a special delay? What about other booming economies and population giants like India? Or is it because MS has a small base unit in China?


RE: Does it make sense?
By allst1 on 1/16/2007 10:25:27 PM , Rating: 2
It's kind of funny though, most products when you look at where they are made it's usually Made in China. Funny how the technology arrives late their.


RE: Does it make sense?
By niravsanghani (blog) on 1/16/2007 11:24:29 PM , Rating: 2
Idiotic
By SkaSucks76 on 1/17/2007 10:57:24 AM , Rating: 2
News flash Microsoft, the XBOX 360 is already here! I moved to Beijing in September and got one within the month. I paid 3,000 kuai ($1 CDN = 7 kuai) and they modded it for me right in the store. Whoever said this will increase the bootleg market was dead on, legitimate games are a bit of a rarity here. You can buy burnt games very easily, complete with glossy cover and the disc looks authentic. I even scored a copy of NHL 2K7. How many Chinese are into hockey? None. So that shows you how much piracy must be going on. They are sold in stores, I've never seen such a blatant disregard for INTERPOL as I have in China, it's great. China's middle to upper class is growing so fast that the world economy has a quarter of a pack of Life Savers in its' pants. This story was so dumb it forced me to create a login. Now the Pirate Bay story, that was cool, do more shit like that.




RE: Idiotic
By Staples on 1/17/2007 12:01:35 PM , Rating: 2
I guess Microsoft won't be able to gloat about their software attachment rate if this actually sells more than a few systems in China.


RE: Idiotic
By niravsanghani (blog) on 1/17/2007 1:40:34 PM , Rating: 2
What your talking about is basically a black market launch. Microsoft, I'm sure knows systems are there, but an official launch will still allow and increase of revenue. Granted systems are sold in stores, but it does not mean they are legitimate. Like you said,

Whoever said this will increase the bootleg market was dead on, legitimate games are a bit of a rarity here. You can buy burnt games very easily, complete with glossy cover and the disc looks authentic. I even scored a copy of NHL 2K7. How many Chinese are into hockey? None. So that shows you how much piracy must be going on.

Considering most games are pirated, its shows more proof of illegal console sales.

http://www.chinadaily.com.cn/china/2007-01/16/cont...

Reuters supposedly has an annonymous source inside Microsoft that credits information on these sites.


RE: Idiotic
By Le Québécois on 1/18/2007 4:34:58 AM , Rating: 2
I think you've already been there for too long since you
call the Renminbi (or Yuan) Kuai, which if I remember correctly is the "local" name for the chinese money.

http://en.wikipedia.org/wiki/Renminbi

Your exchange rate seems a little bit off too, since our "all mighty" canadian dollar is now at 6.6 yuan for 1$CAD

--->

( 1 Canadian Dollar = 6.62698 Chinese Yuan Renminbi / 1 Chinese Yuan Renminbi (CNY) = 0.15090 Canadian Dollar (CAD) )

quote:
This story was so dumb it forced me to create a login. Now the Pirate Bay story, that was cool, do more shit like that.


In that case maybe you shouldn't have created this account because Dailytech is a news site which keep us up to date with technological news of the world. If you prefer Pirate Bay story and the like of it, just keep reading them and don't come comment on the news you find to be stupid.

Don't worry, I'm sure you will find plenty of news like the Pirate Bay one's on Dailytech (I think there was one on Isohun.com yesterday) but please keep your unpleasant comments for Dailytech to you or write directly to Kristopher as I think he's always concern about the well being of Dailytech and any comments you might have about it.


Technically speaking.........
By cheetah2k on 1/17/2007 2:23:10 AM , Rating: 3
Technically speaking, the Xbox 360 has already been released in China - eg. Hong Kong (HK was handed over to China in 1997, and although runs 2 systems of government, its considered part of the mother country!)

It's been here since the very first release, and while I am sure that the majority of the units sold here are probably black market versions, it's here and popular regardless.

For Microsoft to go further into China with this product is definately a decision worth making.. The pure nos of population speak for themselves, and the growing numbers of wealthy Chinese is on the increase (and so is the nos of poor too!) due to the natural development of the country.

If they do the math right, it might be worth while to release a cut down version of the Xbox 360, which could suffice the lower end salaries.

However, price is always proportional to what market you are servicing, RE the Macdonalds Burger Pricing Method should apply here.

My 2 sents

Cheers