China Must Make Own Game Consoles Instead of Importing Foreign Brands
I did not know this but developers in China have been strong in mobile and PC game development because consoles were banned in the country for around 14 years until 2014. Today in 2021 that is no longer the case, so it’s only a matter of time before ByteDance, Tencent or NetEase makes a Chinese game console.
The Metaverse Hardware Boom is Here
It’s tough to compete with the likes of Sony, Nintendo and Microsoft, but the market is too big to ignore. Companies like Xiaomi or Huawei could also get into gaming consoles, if they really wanted to. In the 2020s, the space will grow a lot, and the pandemic also hastens this metaverse hardware boom. Niko estimates China’s gaming hardware and software market will reach $2.46 billion in 2025 from $1.84 billion in 2020.
While China has done really well with mobile gaming, it needs to push into gaming consoles to keep reaching global youth, as it has with TikTok and other apps.
Now Sony, Microsoft and Nintendo have all launched consoles in China, so how long will it take the big three of Chinese gaming to launch consoles for the world? China is playing catchup in so many areas like Cloud computing, chip development, artificial intelligence and the space-race, the 2020s are basically made for China to make up ground with the rest of the world in these regards.
China will easily become the leader in Educational technology and certain aspects of biotechnology, blockchain, mobile and retail technology. So what about gaming? With Microsoft consolidating its position and other BigTech trying to get into gaming, which Chinese giant is most poised to make a breakthrough in consoles?
China’s Gaming Giants will Produce a Winning Game Console Before 2030
The global console market revenue is expected to be $49.2 billion in 2021 and Chinese developers see a chance to expand internationally and grow in the lucrative segment of the games market. You would think that Tencent likely has the most to gain, but it could be ByteDance that could have the most global success in this fastly growing market.
I don’t believe NetEase has the capability of making a global console that would scale well internationally. China often cracks down on imported gaming consoles and thus there is a ‘grey market’ for them. The solution is to build your own and start importing them to other places.
China’s tech giants, alongside a new breed of gaming developers, are looking to tap the growth of videogame consoles in China and target players overseas who have grown up with those devices. The future of gaming scales well and intersects well with consumer apps, super-apps and other things young people like such as music, streaming, game streaming, niche content like anime and books, podcasts and leisure.
The Chinese State is cracking down on things that would ‘corrupt’ its youth including themes inside of video games. All of this importing of foreign brands and gaming consoles from Sony, Nintendo and Microsoft isn’t exactly aligned with its plan.
While ByteDance is practically state-backed, it needs to make a gaming console of its own and its own app store with Huawei, it’s own firewalled internet needs to be sustainable and not rely on grey markets or black markets.
Sony, Microsoft and Nintendo have all launched their next-generation gaming consoles in China. So to be the best you need to compete with the best and make games for your new console. It will be hard to take on the likes of Microsoft and Sony, but to own the future of gaming that’s what you need to do.
Chinese consumers still pay too much for imported consoles. Prices for imported consoles and individual games have returned to pre-crackdown levels, which are slightly above international ones, TechNode found on Taobao.
For the global market, the console is huge — roughly like 30% revenue. So China is losing a lot of money without having its own native console brands, it’s just really a matter of time. Creating a console is no easy feat. China needs to create a console with a better price point and comparable quality to that of a Sony PlayStarion 4, Xbox One S or Nintendo Switch. It could take years, or decades. But for ByteDance or Tencent, if you create a winner it’s a financial bet worth taking.