On Monday, Sony Corp announced that it would be bringing its gaming console the PS4 to China through two joint ventures with its Chinese partner as they seek to tap a newly opened market.
This is after China in January formally authorized the domestic sale of game consoles made in its first free trade zone (FTZ) in Shanghai, opening up a market with an estimated 500 million players to foreign companies including Sony, Microsoft and Nintendo. Last month, rival Microsoft Corp. invested $237 million in a joint venture with BesTV New Media, a subsidiary of state-run Shanghai Media Group, to develop games within the zone.
The state-run Shanghai Oriental Pearl Group Co. said it signed a deal with Sony to form two joint ventures in the city to make and sell PlayStation consoles and software in China. Sony officials said the two companies agreed on the deal last week, but they didn’t provide details on which PlayStation consoles would be released and when they would be sold. The Japanese firm will have a 49% stake in one venture and 70% in the other, according to the statement.
The Japanese firm’s newest games console – PlayStation 4 – has seen record demand since its launch in late 2013 with sales topping seven million units globally last month.
The opening of the huge Chinese market could be a major boost for Sony’s videogame business, its chief executive said Monday, as the firm looks to cast off years of losses.
Sony previously ventured into the Chinese market with PlayStation 2 consoles in early 2004. It later withdrew due to a tough environment that followed strict sales restrictions aimed at countering youth exposure to online gaming.
Still, even without the ban, companies like Sony and Microsoft face hurdles selling their PlayStation and Xbox consoles there. Many Chinese prefer to play videogames on personal computers, in Internet cafes and on smartphones rather than use consoles. Moreover, the black market for gaming consoles is active–with popular games that come preloaded on hard drives–at a much lower price tag.