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China Finally Opens Door to Overseas Game Consoles

Image remixed from public domain.

Image remixed from public domain.

After 15 years, mainland China's Ministry of Culture has finally lifted its ban on sales of game consoles. The new regulations went into effect on July 12, allowing in domestic and foreign companies involved manufacturing and selling consoles. These companies also have to agree to take responsibility for censoring forbidden content identified by Chinese officials.

In China, video games have long been called “electronic heroin,” and some parents and experts worry an increased supply might jeopardize children’s mental and physical health. In 2000, the State Council published a notice, joined by the Ministry of Culture and another seven administrative departments, decreeing the prohibition of manufacturing and selling game consoles in mainland China, claiming it “seriously jeopardizes young people and disturbs the social order.” This is an excerpt from the notice:

自本意见发布之日起,面向国内的电子游戏设备及其零、附件生产、销售即行停止。任何企业、个人不得再从事面向国内的电子游戏设备及其零、附件的生产、销售活动。一经发现向电子游戏经营场所销售电子游戏设备及其零、附件的,由经贸、信息产业部门会同工商行政管理等部门依照有关规定进行处理。

With the publication of this notice, the manufacturing and sale of electronic game devices and accessories must be ceased within the nation. There shall not be any enterprises and persons involved in manufacturing and selling such devices and accessories. If found to be violating these rules, the departments of economy and trade, information industry, and industrial and commercial administration shall punish [related people and companies], according to the relevant regulations.

China's regulatory efforts didn't exactly devastate the country's game culture. Writing on A9VG, a popular game forum, one user shared his doubts about the effectiveness of China's efforts to ban consoles:

其实我一直怀疑到底有没有禁止过游戏机,因为这些年来我们想玩任何游戏机都可以通过实体店或者网络购买到,游戏机房也开的到处都是,当然这些游戏机房基本都靠赌博机,政府虽然面上禁止游戏机,却放任水货在中国横行,真奇葩。

Actually, I've always doubted the prohibition decree of game consoles. These years, we can purchase any kinds of game consoles from physical or online stores, and we can see game-rooms everywhere, though most of of them are making profits as gambling machines. The government seemingly bans game consoles, but it allows sales of smuggled ones nationwide, which confuses me.

All hail the smuggled and pirated goods

The decree in 2000 was never terribly effective; both consoles and games easily reached smuggling markets like online retail platform Taobao, as well as physical game stores, where traders openly sold goods smuggled from Hong Kong, Japan, South Korea, and the United States.

There were drawbacks to smuggled game systems, of course. The consoles would overheat, some discs would be unreadable, and a host of other issues emerged—all without any technical support, as the manufacturers refused to provide it for illegal purchases. When anything like this happened, Chinese gamers simply had to buy the product again.

Pirated games are also a lot cheaper, however. The average pirated game runs no more than RMB 10 yuan (about $1.60), whereas the genuine article can cost almost 30 times as much. For many gamers, the non-pirated product is simply unaffordable.

After buying a console, a gamer usually spends about RMB 100 yuan on a special “direct-read” chip, which allows circuit-modified game console to access the game copy—which can be easily found and downloaded online—directly from the external hard disk drive.

China’s illusive game market

China’s tremendous number of gamers has long been an alluring, but illusive, market. About a decade ago, on November 28, 2003, Sony announced the PlayStation 2 console in mainland China, which was already a major success throughout the world. To bypass the Ministry of Culture's prohibition, Sony called its product a “computer entertainment system,” instead of a “video game console.”

Ahead of December 20 launch date of Playstation 2, however, the Ministry of Culture issued a new decree, and Sony was forced to postpone its effort to bring the console to China.

In early 2004, Sony again tried to sell the PlayStation 2, this time focusing on Shanghai and Guangzhou, at the price of RMB 1,988 yuan ($300). This price was about 25 percent higher than on the black market. As a result, Sony sold only about 1,000 units, thanks to the higher cost and embedded anti-piracy “locked-area” technology.

Free trade zone offers new hope

Planned since 1997, Shanghai proclaimed that the Free Trade Zone to be China’s first economic experimental area in September 2013. The Chinese government issued a notice that welcomes foreign game companies manufacturing and selling game devices, after approval by the Ministry of Culture (in accordance with the guidelines of video-game censorship).

Despite the uncertain future of China’s game market, Microsoft soon announced a partnership with BestTV, a local information technology firm affiliated with state-owned Shanghai Media and Entertainment Group (known as SMG). The joint venture promised to bring the Xbox One—one of the most popular consoles today in North America and Europe—to China by September. Sony has made similar plans for the PlayStation 4 and PlayStation Vita, in cooperation with SMG’s Oriental Pearl Group.

Where's the game rating system?

Game rating systems provide guidelines for game companies that must strictly rate their game content according to age groups. Though China’s government has been simplifying the process of game censorship since 2013, the censorship of the industry remains nontransparent and inefficient without a simple rating system.

On the game forum A9VG, one gamer believes China’s game industry needs to establish the game rating system:

游戏的审批在于中国没有分级制度,可是这个很麻烦,因为无论是欧洲通用的PEGI,还是美国的ESRB,这些都是这些企业为了自身行业的生命力和发展来支持组织的独立行为,都不是政府机构,并且贩卖销售者都会严格遵守,如果你违反了规定,将不会再有游戏卖,所以说大多数来自于行业内部的约束力,而不是政府主导的。

As for the examination of games, no rating system? That's a serious issue. PEGI in Europe and ESRB in the US, which are established on the basis of developing the [game] industry, are independent, nongovernmental organizations. Game traders would strictly follow the [game rating system]. If you break it, you cannot sell game products any more. So most of [game rating systems] are set up by the [game] industry itself, not by governments.

Facing challenge from other devices

With improving Internet access and faster wireless data speeds, online and mobile game has also been booming in China over the past several years. According to the 2014 report of China’s game industry, the gross value of online and mobile game have surged to over $88 billion.

Niko Partners, a research intelligence firm specializing in the Asian game market, said in its 2015 China’s video game report that sales of the PlayStation 4 and Xbox One only have yielded 550,000 in China since 2015, partly due to a lack of Chinese games.

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