By Kareem Fayek
Subtitle: *The massive country is set to overtake the U.S. as the world’s biggest gaming market by 2016*
With a population of over 1.3 billion people, there is no doubt that China has strong domestic growth potential in the gaming industry. Generating more than $25 billion a year in revenue, the country’s surge is driven largely by its use of online games. The online market is thriving and makes up almost its entire market.
The Chinese government banned video game consoles in 2000, worrying that the gaming systems would dumb down or deprave the brains of Chinese youth. But earlier this year, (14 years after the ban was placed), the government finally lifted the ban after realizing its growing market potential. Microsoft has been the first (and only) so far to launch its next-gen console in one of the world’s biggest gaming economies. This was a big deal in the Chinese media entertainment world. When the Xbox One was released in China, (about a month ago) my university in Shanghai instantly bought six consoles, placing one in each student center around campus.
Microsoft, which is currently struggling in its gaming sales battle against Sony’s PlayStation 4 and Nintendo’s Wii U, hopes a move like this will help even out its sales.
Since China banned consoles in 2000, its gamers have grown up playing mostly on cellphones, computers, pirated consoles and black-market knockoffs. Many consumers in China have been told that the value of intellectual gaming property is very low. Instead of buying a $60 game, you can get a disc with 5 games on it for a dollar. If you’re Sony, Nintendo, or Microsoft, the challenge to compete against free is brutal.
Even so, China’s massive market is beginning to influence how games and add-ons are being developed in America. For example, almost one-third of Rockstar’s GTA V downloads worldwide were from China alone.
Activision-Blizzard, the $10 billion dollar revenue gaming corporation, with some of the most successful gaming franchises in history— like Call of Duty, World of Warcraft and Skylanders, is looking to tap into the massive market. In an interview earlier this month with Adweek, Activision CEO Eric Hirshberg stated that the company has a well-regarded internal division, Raven Studios, that is developing a Call of Duty from the ground up, specifically for the Chinese market.
The Chinese version of Call of Duty, in other words, will most likely be a freely downloadable game where users can pay a few quai for certain perks–bigger guns, bombs, etc. It will also probably have a smaller file size than the multi-gig edition that comes on Blu-ray discs for next gen consoles like the Xbox One and PS4.
In many ways, this is the gaming industry’s next challenge. To make it in the key Chinese market, top-tier game developers must produce high-quality games that can be accepted, played, and downloaded internationally.