I'm actually doing my thesis on this very subject (the console market in China) and so I thought I might want to write down a few things about Xbone's launch in China (seeing that I am also living here so I can pretty much witness it).
I'll get straight to the point when I say the Xbone will not do good in China. I think many people think this anyway, but it needs to be said again. I don't know what are MS's expectations but it'll certainly take at least few years to sell all those 5 million consoles they got approved.
The reasons for Xbone's failure in China, however, aren't the ones that are being mostly portrayed when it comes to console gaming in China- censorship, piracy, price, grey market. Let's go through them one by one, quickly, to dispel them:
- Censorship- the censorship on console games is actually quite ok. The recent rules published by the Shanghai FTZ indicate that it will be the Shanghai local government in charge of approval as opposed to the myriad of the agencies that need to approve online or PC games. The rules are also quite strict in that the agency has 20 days to approve or disprove an application and must give specific reasons for its disaproval so that the content provider can apply again. These rules are very favourable and in some cases better than the already established rules for foreign games.
- 2Piracy- honestly, piracy isn't a problem right now due to the Xbone not being hacked yet. And even if that happens by locking out people with pirated consoles from Xbox Live MS holds a powerful weapon in a multiplayer-oriented market
- 3Grey market- this isn't going to be a problem for MS. Mostly because there are almost no Xbone's being sold on the grey market. Xbone arrived in Asia late so the imports really only could have started to happen this month and yet still, from what I've seen no stores seems to stock them.
- 4Price- honestly if a product is a desirable product here in China people will buy even for a higher price. The iPhone costs more here than in the US but no one seems to complain about that either.
Now you might think with all that dispelled Xbone has a nice road ahead of itself but the opposite is true. Firstly, the price, while in general not as relevant as many people might think, will hurt Xbone quite badly because...well it's the Xbone. It's the lesser desired of the two consoles. Overwhelming majority of Chinese gamers prefer the PS4 over Xbone and the grey market is providing quite cheap PS4 imports that will be much more desirable than the Xbone.
Secondly, MS is applying the same failed strategy that it did in the west originally with the Xbone. The ads that are out are focusing on the multimedia features of the console. The message is very much about Xbone being a multimedia centre and a TV streaming box that plays games. Not only did this fail in the west, but when Lenovo tried to use this same strategy to sell their own console 2 years ago it also failed here in China. No one watches streamed TV on their TV in China. When you have services such as youku providing free and comfortable streaming with very little data consumption mobile streaming takes over quite easily.
Further, the games have a redeemable code that prevents them from being ever resold.
The console is also region locked, meaning it will never be able to play some of the games that will surely not be allowed into China.
MS' launch itself was an awful confidence shatterrer as their message when from "we're launching on the 23rd to we're launching before the year ends to, lol actually we're launching in 5 days".
MS seems to be trying in the market, and for that they must be commanded. They will have games such as Halo 5 fully localised and are working with the local developers (i.e. probably paying them nicely) to bring exclusives and ports to the Xbone. However, that seems like too little when they are trying to push the same strategy that has failed for them here with an unattractive console.
