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Microsoft’s Xbox One China strategy has no guarantee of success, says analyst

Wednesday, 30th April 2014 09:27 GMT By Dave Cook

Microsoft is poised to bring Xbox One to China in September, but one analyst feels that it’s a strategy fraught with potential risk.

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You’ll find our full report on Microsoft’s Xbox One China launch through the link, along with a trailer that appears to have surfaced ahead of its planned time.

In a report sent to VG247 this morning, IHS Technology’s Director and Head of Games Piers Harding-Rolls cautioned that while Microsoft’s move into China is both bold and could hold rewards, it is also a risky strategy.

Harding-Rolls cited the lack of a previously-established console market in China as a potential risk factor, and warned that the dominance of tablet and smartphone gaming across the country could cast a broad shadow over Xbox One’s emergence. He stated that from a $12.3bn spend on games in China through 2013, 89% of that sum was PC-related, while a majority of the remaining 11% came from mobile and tablet devices.

“Microsoft’s approach to bringing Xbox One to China appears meticulous,” he wrote, “it has partnered to bring local expertise and content into the venture, it has an established distribution network through its Windows business which it plans to leverage and its product positioning appears to be well blended and not overtly centred on traditional console games.

“Even with this approach, success is not guaranteed. What is clear is that, in a market where very few consumers game on consoles, success will not happen overnight. It will take significant time to educate the Chinese audience about the Xbox brand and Xbox One device – so strategic longevity, deep financial pockets and commercial staying power will all play a role in building towards success in the territory.

“As such, being early to the market gives Microsoft some worthwhile time advantage against its closest competitors.”

On challenges facing the corporation, Harding-Rolls added that aside from pricing, Microsoft must work hard to educate the gaming audience on the benefits of choosing a console ahead of other entrenched devices and PC gaming.

“One way to aid the consumer education process will be through local content which underlines the importance of the joint venture approach with BesTV,” he added. “We don’t expect sales fireworks at launch, but with its partner BesTV, which has access to local entertainment content, a large addressable market of existing IPTV users as well as marketing and distribution expertise, Microsoft is giving itself a good opportunity to gain some advantage over both Sony and Nintendo, when and if they decide to bring their platforms to the market.”

We’ll have more on Microsoft’s China strategy soon. Stay tuned.

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5 Comments

  1. bradk825

    China is a big unknown right now, but the only sure fire way to lose so far is not launch there at all. It’s a big risk, but they have the ability to take it.

    #1 8 months ago
  2. tehpwner

    woah so it “could hold rewards” and “is also a risky strategy” I NEVER WOULD HAVE GUESSED.

    #2 8 months ago
  3. ddtd

    @tehpwner Also, that tidbit about tablet and smartphone gaming being dominant in a society that has banned consoles is just astonishing. I never would have figured that out on my own.

    #3 8 months ago
  4. Dragon

    Chinese market wont be much different than Indian market. $500 consoles will hardly set anything on fire. Even local MS partner only expects 100k sales.

    #4 8 months ago
  5. digmouse

    Unless MS has something really really surprising under their sleeves I don’t see XOne running high here. With that censorship rules in place the majority of XOne’s core gaming experience will be non-existent, on the other hand the video content are under heavy competition from local brand of media set boxes and services, which are also way cheaper than whatever price tag MS will set for XOne here. It’s a flawed concept at best, half-assed gaming capability and generic (read: replaceable at lower price) video services? I don’t see it going.

    #5 8 months ago

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