Sony Chases Microsoft Into China Console Market
I’m not a close follower of global game console leaders Microsoft (Nasdaq: MSFT) and Sony (Tokyo: 6753), but the latest reports of the latter’s launch plans for its PlayStation in China seem to reflect the recent state of disarray at the ailing Japanese giant. Microsoft was quick to formulate a China plan for its popular Xbox after Beijing recently lifted a decade-old ban on foreign consoles, forming a joint venture and launching the consoles last month. By comparison, only sporadic reports have emerged over that time about Sony’s plans, including the latest confusing reports that indicate the company will try to launch its PlayStation 4 in China by the end of the year.
Launching any new tech product in China is always difficult due to import restrictions and the need to develop domestic infrastructure for sales and after-sales support. The situation for consoles is even trickier, since the products were formally banned in China until this year for unspecified reasons. The issue is also tricky because games may sometimes contain content objectionable to Beijing censors, who must clear all titles in a process that could take weeks or even months.
Despite all that, Microsoft was relatively fast off the mark after China ended its ban, announcing a new tie-up to sell the Xbox in China in partnership with a unit of Shanghai Media Group, one of China’s largest media companies. The partners quickly put together a game plan that saw them formally launch the Xbox One in China late last month through a venture in Shanghai’s year-old free trade zone.
By comparison, Sony’s march into China has looked much less focused, including the latest hazy reports saying it is “likely” to bring its PlayStation 4 consoles to Chinese consumers late this year. (English article) In fact, Sony’s roadmap looks similar to Microsoft’s, including its own formation of a joint venture with a Shanghai-based partner back in May. The latest reports indicate that like Microsoft, Sony will also launch its Chinese PlayStation initiative out of the new Shanghai free trade zone.
Sony and Microsoft are joining US e-commerce giant Amazon (Nasdaq: AMZN) in setting up shop in the free trade zone, which was launched a year ago and is being heavily hyped by the Shanghai government. The zone allows companies to bring foreign products into China at preferential import tax rates and then ship them to other parts of China, thus circumventing import tariffs that are normally much higher.
The latest reports on Sony’s launch plans are based on a notice that appeared on the free trade zone’s website, though Sony confirmed that it plans to import PlayStations to its 500-square-meter warehouse in the zone. The notice said only that Sony will package PlayStation consoles in the free trade zone warehouse for sale in China from December, with an aim of selling up to 200,000 units annually.
It’s still far from clear if Sony will be able to actually start selling its consoles in China by the end of the year. Microsoft had originally aimed to start selling its Xbox One in China in mid-September, but ended up having to delay the launch for unspecified reasons before finally formally kicking off sales on September 29.
I’m not a gamer so I can’t really comment on the quality of the Xbox versus the PlayStation and the appeal each might have in China. But if corporate strategy is any indicator, Sony certainly seems to be a bit slower and lacking focus compared with Microsoft. That could ultimately hamstring the PlayStation in China when it finally makes its local debut either late this year or in early 2015, and hurt its longer term prospects in the market.
Bottom line: Sony’s PlayStation China launch more than 3 months behind Microsoft’s Xbox debut reflects the company’s broader lack of focus in the market, and could bode poorly for future sales.
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