News Article

Orders Open For Xbox One in China as Nintendo Looks On

Posted by Thomas Whitehead

Is the big N missing the boat?

Earlier this year China formalised its plans to allow dedicated game consoles to be manufactured and sold in the country, opening the door for conventional systems in a marketplace that had previously consisted of black market goods and legal plug-and-play workarounds; Nintendo has successfully utilised the latter with its iQue range.

Bringing current consoles — such as Wii U, Xbox One and PS4 — to China isn't a simple process, however. There are plenty of hoops to jump through, such as manufacturing all goods in the China (Shanghai) Pilot Free Trade Zone, while all content needs to be checked and approved by the Municipal Administration of Culture, Radio, Film, and TV; the limitations on content deemed damaging and unsuitable will also be an obstacle to a lot of violent or mature games so common in the West.

With those circumstances you'd think that Nintendo would be best-placed to take advantage of what could be a hugely lucrative market, yet the Kyoto company is currently behind its main rivals in terms of releasing a new system in the country. Microsoft has been pushing through manufacturing in the designated zone and has partnered with two major distributors that will sell the system online and through consumer shows; Sony is currently going through similar processes to manufacture and then distribute the PS4.

Nintendo has opted for a different strategy, announcing in May that it'll produce new hardware for emerging markets, including China. The company argues that the Microsoft strategy of pushing through with its existing system isn't necessarily the best solution, as Satoru Iwata stated.

We think the Chinese market has a lot of potential, but I don't think the lifting of the ban has solved all of the difficulties in entering it. We need to study it more... For us, Microsoft's approach wouldn't work.

We'd expect that Microsoft will face challenges delivering games that pass the stringent regulations and attract sales, though there's naturally a concern that Nintendo's plans for the country — potentially due to begin in earnest next year — may come after the its rivals have already seized a large part of the market.

The coming months and the performance of the Xbox One — and then PS4 — in China will be intriguing to see. Perhaps Nintendo's strategy and alternative product will prove to be a masterstroke, but pursuing that strategy rather than simply releasing the Wii U — and its range of games that would surely cruise through approval processes — is a gutsy decision.

Are you confident that Nintendo has a sound strategy for the Chinese market, or worried that it's lagging behind its rivals?

[via bloomberg.com]

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User Comments (65)

Jazzer94

#1

Jazzer94 said:

Yes they need get the Wii U into China quickly, way to big of a market to pass up.

smikey

#2

smikey said:

I don't doubt microsoft & sony to a slightly lesser extent will face many issues in China a vast majority of games on those consoles that make the serious money will never get in.
I do think however Nintendo even if they Don't want to drop the wii u in there should at the very least have given them the wii.
far easier that basically starting from complete zero.

ikki5

#3

ikki5 said:

Sigh, Nintendo's management really needs to be let go, needs a massive overhaul and new people need to come in. I really don't understand this here, this is pretty much them saying "We don't want money so we are not going to go there". Like come on. I know Nintendo has tons of money but doing nothing isn't going to make that money grow nor will it allow it to be maintained at a healthy level. It seems that every month there is just bad decision over bad decision and this one is just another bad one. If they don't get in there now, they won't get in there at all. Need an example? Look at the Xbox in Japan. Sony and Nintendo started there, the Japanese people knew them and recognized them and then Microsoft comes in, not well known and boom. Xbox 360 is a flop. Nintendo will be the same by next Gen for China... that is if they decide to even bother. With the people in charge now, they'll be is horrible shape next gen.

Gerbwmu

#5

Gerbwmu said:

How many people in China have HDTV's? What % of the population can afford a dedicated gaming system for the price of a PS4 or XB1? How about localization costs? Yes Nintendo needs to get into the Chinese market but they already have a presence with iQue and I'm not sure Wii U would be the best solution. Maybe a Wii Mini is the way to go?

WaLzgiStaff

#6

WaLzgi said:

Except China as a market is not the same as elsewhere. The middle class has far less money and can't really afford a PS4 or Xbox One. Nintendo is probably opting for a cheap and effective console instead. Heck, the Wii would sell like hot cakes rather than the Wii U

@ikki5: I don't think you understand China as a market more than executives who have done their research. Throwing an expensive product at a new market does NOT guarantee sales at all. Also, doing "nothing"? Did you even bother reading the entire article?

ricklongo

#7

ricklongo said:

I don't think emerging markets need specific hardware, and especially not in the times we currently live in. Anyone can find out about new worldwide successful software with a simple Google search nowadays, not to mention play cutting-edge PC games; offering inferior versions of those famous IPs simply won't cut it.

RainbowGazelle

#9

RainbowGazelle said:

As @ikki5 said, Nintendo seem to hate money sometimes. Flipnote Studio 3D - vanished, Pokemon games on virtual console - nope, New Metroid - nowhere in sight. The main problem is that they take an absolute age to do anything. The Wii U's been out for almost 2 years and they've still barely marketed it. Here's a second chance to release it in a massive new market, but they're still dragging their heels.

ikki5

#10

ikki5 said:

@Unca_Lz Yes, I agree that it does not mean sales, however, doing nothing will get you no where at all. The Market business is about taking risks, not taking any risks when you are already starting to struggle is a set up for more failure. Even more so, not putting a product there means no one gets to know you and with a country that holds 1/6th of the worlds population (yes, I know a lot of them are probably in poverty), you must be stupid to not at least get your foot in the door.

SkywardLink98

#11

SkywardLink98 said:

China contains what, 1/6 the worlds population? Even if 70% of them cannot afford the Wii U that's still an audience around the size of the US's.

eaglebob345

#13

eaglebob345 said:

I think we could be seeing a Gamepad-less Wii U (Probably either Wii 2 or using that iQue brand they already had) for China. Think about how the 3DS is with the 2DS or the XB1 with the Kinect-less bundle. Removing the gamepad would kinda suck for some people, but none of the current or upcoming excellent Wii U games require the gamepad. Taking out the gamepad and adding the Wii remote and a pro controller could do well under a Wii 2 moniker, just about anywhere. Slapping a Wii 2 plays Wii U games note on the box couldn't hurt.

vitalemrecords

#14

vitalemrecords said:

@ikki5 You didn't read the article. Nintendo is releasing a brand new system in China. So yeah - they've also have a huge turnaround the past 6 months or so.

Emblem

#16

Emblem said:

China is way too unpredictable as a video games market to make any real analysis of how well this gens consoles will actually work. Despite a massive population, entertainment revenue is not that high in China mainly due to rampant piracy, low income and restricted media content. I'm really interested to see how China's official console scene shapes up. At the moment China is dominated by PC and mobile games which are both easily accessible and cheap.

Inkling

#17

Inkling said:

Wii Mini would sell really well there, plus I wonder what this new system for China is...?

WiiULoveSquid

#18

WiiULoveSquid said:

@ikki5 Nintendo has been operating in china since 2003 under the iQue brand. It would seem to me that they understand the market along with its saturation of pirated goods and economic peculiarities. A bespoke system and operation for the country makes a good deal of sense.

eaglebob345

#19

eaglebob345 said:

Also, it could also just be a Wii U with lesser features or material (think PSV redesign) under the iQue brand. All three companies have tricks up their sleeves, one of Nintendo's biggest is already having a presence in China (although it is under a different name). So many ideas floating in my head, I hate being bored... it makes me think too much.

MrGawain

#21

MrGawain said:

There are a lot of nouveau riche in China now due to the modernisation of their commerce, but they want real western products- not chinese made knockoffs which are deemed to be substandard. I don't know how these Chinese Consumers will react to a Chinese built XB1 with a very limited list of games that the government would allow in the country- but then Microsoft are determined to sell more consoles than Sony by any means and are willing to take a risk.

The biggest stumbling block for any console manufacturer is the Chinese government. They don't give Nintendo any safeguards for their designs or IP- remember Microsoft will be gambling 3rd party games to the pirates, Nintendo must be far more cautious with their own intellectual property. Plus there is the question of cashflow- expanding into this market will cost money at a time all three companies can't afford to waste any.

I don't blame Ninty holding back for the moment. Short term gains could very easily turn into a VERY big problem that would be impossible to undo.

Hy8ogen

#22

Hy8ogen said:

I think Nintendo just doesn't want to see Wii U knockoffs after 5 months lol. Either way, time will tell if Nintendo made the correct decision.

Sephariel

#25

Sephariel said:

You do realise that that the number of people in China who can afford XboxOne, PS4, Wii U or any gaming console is very, very low. They just dont have the money for it and if they do, they just buy some knockoff console becouse Its cheap.

Action51

#26

Action51 said:

@Sephariel - also, those knock off consoles aren't regulated by the quasi-communist government either. Trademark and copyright infringement runs rampant in China.

WaLzgiStaff

#27

WaLzgi said:

@ikki5 @Hernandez Obviously we need some quotes to make a point: "Nintendo has successfully utilised the latter with its iQue range." and "Nintendo has opted for a different strategy, announcing in May that it'll produce new hardware for emerging markets, including China."

The decisions are made. Something is going to happen. Nintendo already has a market in China.

If you look at the data of China, most of the country can't afford expensive consoles. Microsoft's strategy will most likely not even work because of the abundance of knock offs that are cheaper. Nintendo actually has the advantage since their products are already in the country.

NintyMan

#28

NintyMan said:

I wonder how many Chinese could even afford a XBox One, not including its games? Sure, China is a massive country and it's a tempting new market, but there has to be differences there compared to the West and even other East Asian nations like South Korea and Japan. Nintendo would be smart not to rush into there and weigh their options. Not only are there the poorer Chinese and tech-savvy pirates to consider, but the strict Chinese government too.

JusticeColde

#29

JusticeColde said:

It's already been confirmed that chinese gamers don't like Xbone. Nintendo has nothing to worry about.

Plus an overwhelming majority of the games on Xbone (if the new commercial is anything to go by) would never even be considered for government review and will be instantly banned as a result.

Sony has a better chance, but Nintendo basically owns the market which will make it an uphill battle.

AndyWARbear

#30

AndyWARbear said:

Microsoft and Sony will sell millions of units, but only to a very small % of the population. Bare in mind there's 1.35billion people in China, just 5% saturation still amounts to 67.5 million sales.
The Wii with a decent built in hard drive has the whole back catalogue of gamecube games which it should come bundled with. Would be cost effective and great entry level gaming for China. We are seeing the return of the Gamecube controller for the Wii U so hopefully we see some Gamecube games on our Virtual Console. Win win for everyone.

Kodeen

#31

Kodeen said:

@Unca_Lz

"Nintendo has successfully utilised the latter with its iQue range."

Successful how? Successful in that the original iQue was pirated to hell and back? Successful in that iQue console releases have been several years behind the rest of the world? Successful that no iQue system has had more than 10 games released for it?

Thomas's use of the word successful was a bit too generous in that sentence, you shouldn't be relying on it. A better phrasing would have been "and legal plug-and-play workarounds; Nintendo has utilised the latter with its iQue range to varying degrees of existance."

rjejr

#32

rjejr said:

China is a no win. Either its too expensive or knockoffs will come. Wii Mini maybe.

I just dont think its worth it to them. And in case some of you havent been paying attention, the Wii U and PS4 hasnt been selling well in japan, their native homeland, why would anynody in china buy them?

Maybe there are some old DS phat laying around.

I wonder how much Microsoft is plamning on selling in all of China vs just Hong Kong? Still, Nintendo has enough to worry about right now selling their systems in the rest of the world so Im ok w/ them skipping china for a few more years.

DBPirate

#33

DBPirate said:

I'd like to see this new cheap console they're working on for China. So far, I'm satisfied with Nintendo's approach though.

umegames

#34

umegames said:

Everyone on the internet suddenly knows the Chinese economy better than Nintendo...

Henmii

#35

Henmii said:

"Is the big N missing the boat?"

Hard to say. At least Nintendo has its feet on the ground, with the i-que and the presumably upcoming devices. Nintendo choses its own strategy (as always) and I hope for them that it works!

noctowl

#36

noctowl said:

@AndyWARbear this is china. Millions of X1 and ps4 isn't going to happen. Do you expect millions of sales in Africa too?

They have bigger issues than video games, regardless of the population size.

Kyloctopus

#37

Kyloctopus said:

@ikki5 Nintendo said they are studying the market before having the system release in China
Remember, manufacturing still costs money. They want to be prudent and release the system right, and not leave so many Wii U's out on shelves.

AndyWARbear

#38

AndyWARbear said:

@noctowl I understand what you're saying but it's a naive and narrow view of the world. China's gaming industry grew 34% from 2012 - 2013, of which 94% of it's gaming is online. Japan and China lead the world for purchasing Mobile games. A cheaper system will allow Nintendo to appeal to a larger % of the population than MS and Sony.
Africa and China may well have more important things to deal with in general, but there are still enough people with means to purchase gaming consoles in both. I have visited China for my work so I have a fairly good understanding of their purchase habits, etc. My estimate is that 5% of the population will purchase a console(either home or handheld) this generation, a modest amount compared to the number of gamers in China already.
Honestly if Nintendo want to win China, they will need to nail online and micro transactions. They are trying with Sub Wars on 3DS. Pokemon could absolutely explode, as well as Yokai Watch.

Windy

#39

Windy said:

I'm sure Nintendo has a plan in place for China. I bet the way they do it will go through smooth as silk. Anyway we will see soon. Nintendo will be like a cobra jumping out of a basket to bite the competition in the Arses. Wait and see.

I was thinking today this is more North America related though. Nintendo should make a deal with the producers of Big Bang Theory get Wii-U on the set of that show as regular topic for the show and show the world what the Wii-U can do. I seriously have friends who still think the Wii is nintendos current system. I think it would be an awesome idea as the show is still very popular and it could make for some fun topics. They used too have halo night now they can have splatoon night. Or MarioKart 8 night. Doing it this way would blow away typical TV commercials

audiobrainiac

#40

audiobrainiac said:

When i clicked the link "plenty of hoops to jump through" I expected to see search results/images for hula hoops big enough that one could indeed jump through. Well played, Nintendo Life. Apparently, i missed that article ;P

Smooty

#41

Smooty said:

@Splatom Not only for china, its going to be released in "emerging countries" Namely Mexico, i think all Latin America too, uh... yeah. I'm in Mexico so Yay! im getting this new cheap system

SahashraLA

#42

SahashraLA said:

What stops rich Chinese businessmen from exploiting the cheaper to make product and a) licensing 'official' rip offs, b) exporting to foreign markets to make huge profits or (worst case for Nintendo's piracy concerns) c) manufacture devices / procure code to vidtually eliminate software sales?
The Chinese have literally done all of this before. Movie theatres, video games, music.. they may have not started it, but Chinese piracy has cost the entertainment industry hundreds of billions.
Honestly speaking, I don't care what embargoes, treaties or hoops they jump through, enough cash and the Chinese entertainment industry's acceptance of video games will be the medium's end.

Dreamz

#44

Dreamz said:

A cheap Wii bundle could make a killing in the Chinese market, but I understand the stance of letting Sony and MS throw cash at the market to figure it out before Nintendo comes in at a later point with a solid marketing plan built on their failings.

Einherjar

#45

Einherjar said:

Funny how many people think its just about "throwing stuff on the chinese market and be done with it" instead of realizing the difficultys it comes with, especially with a market like china.

Sugar_Crunch_BD

#46

Sugar_Crunch_BD said:

@Gerbwmu The Wii Mini actually seems like a great idea, maybe they could mix it up a bit and add a dedicated memory card that you could take to IQue stations and download Wii games. It would allow Nintendo to become more of a brand in China if they stick to the IQue stations.

S-Miyahon

#47

S-Miyahon said:

Why don't they want to release the Wii U there? It's literally the 8th gen console with the most and best games available

TheRealThanos

#49

TheRealThanos said:

Nag, nag, nag. A lot of pseudo marketing analysts at work here again. A lot of people seem to forget the ridiculously stringent rules coming from China's Municipal Administration of Culture, Radio, Film, and TV, to which all parties must abide.
For example: consoles that are being sold in China may ONLY be produced in the China (Shanghai) Pilot Free Trade Zone. The Municipal Administration of Culture, Radio, Film, and TV must give it's approval on each and every game and ANY further developments concerning the consoles themselves.
Even something as simple as changing a button or firmware will result in a renewed investigation and subsequent verdict. All these measures result in having to make quite a few extra expenses, which is what Nintendo can't afford to do as easily as Microsoft or Sony. But still, Nintendo has indeed already had some experience with that because of the iQue range, so they know all this.
Microsoft and Sony do not, so there is definitely a method behind Nintendo's "apparent" madness.
The other two may have to invest quite a bit of money with no guarantee whatsoever that they'll be successful and the iQue range is already selling so Nintendo is actually ahead of the other two. And Microsoft's track record in Asian countries is hardly anything to write home about, so no need to worry just yet...

jancotianno

#50

jancotianno said:

"We'd expect that Microsoft will face challenges delivering games that pass the stringent regulations and attract sales, though there's naturally a concern that Nintendo's plans for the country — potentially due to begin in earnest next year — "

"A very large number of video games are banned in the People's Republic of China. Games that contain drugs, sexual themes, blood, depictions of organized crime or the defaming of the Chinese government are almost always banned from sale. Because of the large size of the Chinese video game market, many studios will edit the content of their games to conform to the government's standards."

So, you can't release your console in China expecting that people will play GTA V, Sniper Elite III, Wolfenstein, Watch Dogs, Assassin's Creed....... Even Batman. The government needs to approve that. Anything can be a problem for them. EA can try to release Fifa 15 for Wii/PS4 and then the chinese government will complain it doesn't have the Chinese League, and to be approved it is needed to include their local teams. - it means work, time and money - .
If you release a game like Mortal Kombat, you'll have to remove blood from the game (remembering the first MK for Snes)...
If the theme of a game is "Freedom", probably it will be considered a protest.

Releasing a "different" hardware would be a way to make sure that this kind of games won't be played by the chinese people. Well, they could be releasing a different version of Wii Mini, and porting games like Wii Sports and Mario Kart (Wii) for them.

Dogpigfish

#51

Dogpigfish said:

Microsoft already manufactures everything in China, additionally has Chinese members. They'll have no problem. Nintendo has the same issue its always had; its smaller and less connected. They would need a new chinese manufactured console. Also, no ones even talking about China's software piracy policy; which will pose challenges for all three.

TheRealThanos

#52

TheRealThanos said:

@Dogpigfish "Microsoft already manufactures everything in China"
Ehm, no they don't. Certainly not concerning the Xbox One: around 90% of the hardware is manufactured in Manaus, Brazil. Same place as the 360 Slim and PS3, by the way:
http://translate.google.com/translate?hl=en&prev=/search%3Fq%3Dhttp://jogos.uol.com.br/ultimas-noticias/2013/10/23/xbox-one-sera-fabricado-no-brasil-segundo-anatel.htm%26newwindow%3D1%26safe%3Doff&sl=pt-BR&u=http://jogos.uol.com.br/ultimas-noticias/2013/10/23/xbox-one-sera-fabricado-no-brasil-segundo-anatel.htm%3Ffb_action_types%3Dog.recommends&sandbox=0&usg=ALkJrhh_KzFLLtA46F7_IhMWWTiRPGQJ2w
The orders are mostly shipped to Singapore, which is in Asia but isn't a part of China as it is a republic and sovereign state:
http://www.digitimes.com/news/a20130904PD219.html

mike_intv

#53

mike_intv said:

Nintendo is being cautious and conservative. That is how is always does things. And given issues related to respecting IP, it is probably the way to go.

CrazyOtto

#54

CrazyOtto said:

I wonder how well the Wii U would do in China, it probably won't even be backwards compatible with Wii games over there since they never officially got the Wii.

WaLzgiStaff

#55

WaLzgi said:

@Kodeen Well maybe that's WHY they're hesitant on this market. Nintendo has more knowledge of the market than Sony and Microsoft. They also probably know that they need to make a console that is so cheap that pirating it would be pointless. Throwing the Wii U as it is to the market will most likely not work.

Also, Microsoft failed miserably in Japan, so I have no faith in their strategy in China.

gatorboi352

#56

gatorboi352 said:

@mike_intv "Nintendo is being cautious and conservative. That is how is always does things. "

Yeah, boy... that's really worked out for them well up to this point hasn't it!

The one time Nintendo wasn't cautious and/or conservative they created the Wii. The rest is history.

hydeks

#57

hydeks said:

No offence Nintendo, but YOUR strategy won't work. These people finally get a chance to play some real video games, and your not even considering bringing the one console that would probably do very well in that region to them?!? Instead you wanna make another system (probably a poopydoodoocacapoopledoopley iQue U type thing).

I think Nintendo's move is simply silly, considering it sounds like Nintendo and their family friendly brands would do very well in China, and with the Wii U being very cheap console, I could see the Wii U being as big there as the Sega Master System was in Brazil. Feels like a huge missed opportunity.

@Unca_Lz China and Japan are two very different countries, VERY different.
Please watch the profanity and offensive slurs — TBD

Luna-Harmony

#58

Luna-Harmony said:

So they make the Wii u in china but don't sell the console in china .... how on earth does that work. It's like making your self dinner but not being able to eat it in your own country.

mike_intv

#60

mike_intv said:

@gatorboi352
Actually, the Wii was SD while the others was HD.
The Wii did not have DVD playback — it was only a game machine not a full-time media hub.

Both of these were seen as conservative decisions at the time.

mike_intv

#61

mike_intv said:

@hydeks

The r-word has no business in civilized discourse.
If you feel Nintendo's strategy is challenged, that is fine. But if you have followed the conversation, you know this is not an automatic situation for success.
There is a potential for high piracy with limited IP protection.
There are strict governmental limits on where the systems have to be manufactured (which apparently is not the same place exports) and game standards.
Nintendo has decided to do something different in this market than just release its regular console. That will protect its investment if something goes bad. Whether or not this is the right strategy is a winning one remains to be seen. But for Nintendo, it probably makes far more sense than investing hundreds of millions of dollars into a plant that may have a limited lifespan because of red tape and copy cats.

Tobias95

#62

Tobias95 said:

One question. They are making something new for emerging markets and China. Then why is it 3DS XLs?

My bad. When I clicked on the link I saw 3DS pictures and tought that was the new thing. Oh well, I hope they share the Quality life thing with the rest of the wirld too.

Memeboy3

#63

Memeboy3 said:

@RainbowGazelle There was already a new Metroid announced.

I like how a lot of people here think they suddenly know everything about the Chinese Economy better than Nintendo.

WaLzgiStaff

#64

WaLzgi said:

@hydeks You're right, but China has next to no reason to get an Xbox One. Also, explain how selling the One will work if you intend to bash Nintendo.

I don't understand why people are bashing Nintendo for hesitating to make a risky move in a risky market that can backfire easily.

theBluntKnight

#65

theBluntKnight said:

damn I get the feeling NIntendo knows something about the chinese market that we dont. I mean the obvious move is surely to just sell the wiiU there. I'm pretty sure the wiiU is being made in chine. I suspect it's part of a deal struck with chinese manufacturers and the government to have the console made to suit some particular element of the chinese market. I hope for nintendo's sake they know what they're doing.

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