Chinese gamers testing out the Xbox One, Microsoft's video game console that launched in China last fall. Image: Microsoft.

US Video Game Makers Attempt to Crack the Chinese Market

China

In mid-January, first-person shooter video game Call of Duty Online hit the Chinese market for public beta testing. The game, developed by Activision, a US video game publisher headquartered in Santa Monica, California, is a spinoff of their highly successful Call of Duty franchise, and made exclusively for China.

Activision’s plunge into the Chinese market comes on the heels of the Chinese government’s recent loosening of restrictions regarding foreign video game products in January of 2014. New regulations, released last April, lifted the 13 year ban on consoles in the country. The new policies allow foreign companies to partner with Chinese companies to produce and sell games out of the recently implemented Shanghai Free Trade Zone.

Microsoft, the first to take advantage of these eased restrictions, united with Chinese company BesTV in a $237 million joint venture and released the Xbox One, its gaming console, in China on September 29th, 2014. Sony and Nintendo, Japanese competitors to Microsoft, are also looking to enter the major new market. Sony has plans to release its PlayStation 4 console in China early this year, while Nintendo has also expressed interest in operating in China.

The video game market in China, with an estimated value of over $13 billion in 2013 and with upwards of 500 million users, is an attractive lure to foreign companies. Due to the unique aspects of the Chinese market, including high prices and black market sales, the jury is still out on how successful consoles will be in China.

However, Activision may have a leg up over console-oriented companies. Call of Duty Online is a free-to-play PC game with revenue generated through in-game purchases and downloadable content, such as character customizations and weapon add-ons. This strategy may better suit Chinese gamers, who tend to gravitate towards free titles on PC and mobile devices.

Activision has also found the perfect partner to market and develop the game. Since 2012, they have worked with Tencent, China’s largest online-games and social-networking company. Controllers of social networking and messaging services like WeChat and QQ, Tencent possesses market know-how and huge advertising capabilities. They even produced a Chinese-language trailer for the game featuring Chris Evans, the American actor known for playing Captain America.

Time will tell if American companies can succeed in the newly accessible Chinese video game market, but these early efforts seem poised to make a strong showing.

Chad Westra is a Research Intern at the East-West Center in Washington and an undergraduate student at Calvin College.