Chinese move to gaming in the home, but don’t expect government to approve game consoles

Chinese gamers are increasingly moving to playing games in the home and on mobile devices rather than at the ubiquitous Internet cafes in China, according to a report from market researcher Niko Partners. But that doesn’t mean Chinese gamers will be able to play on home video game consoles soon, given government restrictions.

China has banned home game consoles for a long time as unhealthy for the nation’s youth, but it has no such restrictions on PCs or mobile devices. Rumors have abounded that the government is about to lift a years-long ban on consoles, and the South China Morning Post reiterated that in a post today. If the approval comes, it could be a bonanza for Sony, Microsoft, and Nintendo. And it could hurt the fortunes of PC makers. Niko Partners’ founder Lisa Cosmas Hanson said that it is “unlikely that China’s long-standing ban on consoles will be overturned in the near future.”

Niko Partners said in its new report that the majority of PC online game revenue is now generated from home-based gameplay rather than Internet cafes. Advanced Micro Devices continues to gain market share in the installed base of systems at Internet cafes, and Lenovo continues to dominate in home PCs. Tablets and other mobile devices are growing in usage, but gamers still intend to buy new PCs to replace older systems.

Niko also said that gamers are playing more shooter and battle arena games than massively multiplayer online role-playing games, which previously dominated the Internet cafe market. Niko tracks data from more than 25,000 systems across China, and it takes a quarterly survey of 2,000 home gamers.

“Internet cafes remain important for utilitarian usage as well as social usage,” said Kevin Hause, senior partner of Niko Partners. “Further, we notice that shooter games and battle arena games have led gamers back to I-cafés for social competition more so than MMORPGs do.”

Cosmas Hanson said in an email, “The South China Morning Post article published this week referenced a Free Trade Zone in Shanghai endorsed by the highest levels of Chinese government. This is true and was announced a week ago. There are also other Free Trade Zones either established or under consideration throughout China (Shenzhen, Tianjin), yet the establishment of those zones has not caused the same type of assumptions that consoles would be allowed there if production moved to those zones. There is no specific mention of consoles in the announcement of the Free Trade Zone, and we think that the journalist of the SCMP made some assumptions that consoles would be included if the culture ministry would have authority over the game content.”

She added, “We believe that this year there have been strides in improving trade and the possibility of more open rules for games in China. But, we think it goes too far to say that if a Free Trade Zone opens in Shanghai that it will automatically mean that consoles would be included if the manufacturers switch their production facilities to within Shanghai. At this point, Niko Partners believes that it is still highly unlikely that the ban on consoles will be overturned in the near future. Should that ban be overturned it will be approved by many regulatory bodies and there would be significant policies defining what would be permissible and what would not. The regulatory issue concerns the console systems themselves as well as the content of console games. It should be noted that Niko Partners has not interviewed any government officials regarding this matter in the past few months, but based on past conversations the decision to overturn the ban was still to be a long way off, if ever, and was to be based on numerous factors that had yet to be decided by the Ministry of Culture, Ministry of Industry and Information Technology, the (then) General Administration of Press and Publications, trade ministers, public safety ministers, and more.”

[Photo credit: Kai Hendry, Flickr Creative Commons]