With the Xbox set to release in China, there has been a lot of talk, and not a lot of objectivity, about what that means for us as gamers. Below, I do my best to give a no-bias outline of what we can expect.
Why Xbox?
Before we look at X-box in China, lets look at why we even have an X-box in the first place. No one really wants to enter the video game market, and with good reason. Traditionally a small slice of the entertainment pie, the industry had proven itself to be volatile and unforgiving from its conception. You hardly have time to recoup development costs before your console is obsolete, and a single piece of unpopular hardware or even software could be disastrous. Even Sony’s entry into the market in 1994 was more the results of a opportunity that presented itself after a Nintendo mistake then a real desire to be console makers. It’s rather shocking, then, that in 2001 software giant Microsoft decided to enter the console business with the Xbox. They had just seen the launch of the Dreamcast devastate Sega (a failure they played an important part in*) and launched alongside the Nintendo game cube to do battle with the PS2, a juggernaut of sales that showed no signs it was ready to give up market share (spoiler: it didn’t). It’s seems almost self evident that Microsoft would have been much better off leveraging the PC as a gaming platform if video games were something they wanted to do, or by spending the money to market Windows to developers directly. Why then, make an Xbox?
The answer is hidden in plain sight; the Xbox name. The brand has become so common place it’s easy to forget its origin as “The Direct-x Windows Box”, a modified Dell computer taken to market with the goal of doing exactly what Microsoft should be doing; selling the Windows brand to the 18-25 demographic, and selling Windows tech to game designers. Even Bill Gates himself downplayed the video game aspect of the Xbox, refusing to call it anything other than a “Multimedia Device” when speaking internally. He sold it to shareholders as being in line with the goal of Multimedia Convergence, meaning his goal from day one with the Xbox was to use it as a content deliver platform. Some say he spent more time and effort on getting professional wrestler “The Rock” to do the official announcement at GDC then he did on what they were going to say about the system, because the branding was more important to him then the product. He just needed someone "cool" to say it ran direct-x, and call it a day. It was brilliant. A targeted marketing campaign to reach people that were moving off PC gaming to console would have a cost in the millions, and a re-branding of Microsoft as a whole to be a “hip” company the next generation would be interested in would be in the hundreds of millions. By spending that money instead on a console, they were able to build that brand awareness with a key demographic and have something to show for it. And it worked. Brand awareness with young adults started to see double digit increases. The numbers of developers that used Direct X sky-rocketed. I think they sold a few copies of “Halo” as well, if that’s important.
Xbox One, take two
Over the last few years, Microsoft has seen strong increases in the US and global enterprise market, and has shown they are more than able to fend off powerful rivals such as Goggle and Apple in that space. Unfortunately that’s the only space they are winning in. Although they have yet to get to the point where they are losing market share in the consumer market at dangerous levels, just about everyone else is doing a much better job of getting a foot in the door, and over the last 2 years Sony has very successfully eroded their current console market share. Because of this, China is both the Wild Wild West, and the land of opportunity. With over 1.3 billion people already using knock off or pirated Microsoft products ripe to be monetized and a market that is opening up to consoles for the first time in 14 years, it seems like the perfect opportunity to do more of the same; use the Xbox brand to sell the Microsoft brand, use the Microsoft brand to make money. Given a head start of over a year, a contract with one of the most respected companies and China, and the fact that both major console competitors are Japanese** Microsoft looks like they are in an incredibly strong position to capture the market and it’s hard to say why we shouldn't take note of that. After all, there are more gamers in China then there are PEOPLE in the USA, and that has to mean China will have a huge impact on the market moving forward. Doesn't it?
What games?
There might be more gamers in China than anywhere else, but there is also a uniquely Chinese infrastructure at play. The ban on consoles isn't doing anything to free up the ban on anything we here in the west would consider “a game”. We all know by now that video games in China can’t have violence or drug use, but we often forget they (as well as all media in China) can’t feature ideologies that are not pro-china, can’t mention world events, can’t talk about themes that involve questioning the government, can’t mention religions other then Buddhism and Taoism*** ... and that’s just the big stuff. Any published media needs to get by an “ethics” review, and that’s where things get subjective and subtle. Maybe the map screen shows lines around Tibet. Maybe you mention a date where something bad happened, and that needs to be changed. Who knows. Localization is a non-negotiable that you have no control over, and it’s obtusely corrupt to boot. The games people play in China, therefore, are mostly casual and simple games on mobile platforms they already own. Social games, like our “Second Life” are the most popular, as they allow people to interact from home in a society where going outside has heath risks, and personal interaction is riddled with class, ethnic, and social stigma. The idea that Microsoft is going to make money developing and selling traditional games is laughable, and predictably that’s not at all what they are looking to do.
Instead, they spent over a year working on content distribution and hosting agreements with one of China’s largest media outlets ... and that’s a big deal. This will allow them to play on China's national and brand loyalty while taking a cut of everything that gets sold on their platform. They will work on releasing casual MMOs, while repurposing games like Peggle to appeal to this market. And while this isn't a core area of Microsoft’s focus, it’s important to note that by breaking down the huge barriers of entry to the China’s market as a publisher, they could easily set themselves up to be the go-to console for indie and small developers looking for a breakout hit. In addition, this puts them in a position to negotiate distribution of TV, Movie and Music to over a billion people for thousands of publishers who would otherwise be unable to get a foot in China’s door. This could very well give them enormous power when it comes to distribution contracts in other markets. But what’s that mean for the Xbox owner here in the West?
Number, numbers everywhere.
Any other year, any other console generation, this would seem far less important. But with fanboy devotion at an all time high, news sites posting “click bate” to drive comments and traffic, and information and sales figures being tracked and published at an unprecedented rate, this story is perfect to fuel the flames of the “console wars”. Let’s not beat around the bush; it has an effect on a landscape people really seem to care about. If you look at the plan, for all effective purposes the Xbox One has overtaken the global sales title from PlayStation 4, as they have already signed an agreement to “sell to” 5 million consoles. If you’re a Sony fanboy who has spent the last 4 months defining your worth as a person based on the sales gaps between the systems, I can see where this might be a problem. If you’re an Xbox One fan boy waiting for a chance to “pounce” on your enemy, I can see why you would care. The obvious rebuttal is that the sales don’t count until the system launches, or that “sell though” is all that matters, but I have some good (or bad) news for you. First, your fanaticism is not based in reality, so you never have to worry about FACTS. Second ... China's sales numbers are completely meaningless. They won’t affect Xbox’s ability to lure developers to Xbox One, and won’t result in Xbox One getting any new games (and why else would sales figures matter?)
If you look at everything I've been talking about to this point, it seems very clear that what Microsoft is doing is trying to make the Xbox One the best possible tool for developers and publishers who were ALREADY interested in the Chinese market. Microsoft has paid off the right people on the ethics committee and already has a deal for distribution, so if you are planning on making a game for China putting it on Xbox One can save you a world of hurt. But we would have gotten these games anyways, and they wont spend any more money on development just because the craps shot that is China now has slightly better odds. At the same time, any new game made for China to take advantage of the console itself will need to be so “Chinese” that it’s not going to be ported to the west ... “Super Chairman’s Communist adventures” tested poorly in the US market. The only way we would see a port is if the game had a big enough budget to support localization, which simply wont happen any time soon. Given how fickle China’s government is no one is going to invest in an AAA game, because what happens when the ethics committee pulls the plug because Xi Jinping decides he doesn't like the color blue any more and it can't appear in media?
The Final Word
The Xbox One in China is already a winner for Microsoft. Even if it crashes and burns, the money was well spent in creating distribution partners and brand awareness in this very difficult space. But win, lose, fail, success ... the opening of the Chinese console market is not going to have any impact on gamers outside of China for a long time. There is nothing to see here, and we should all move along.
Did I miss anything? What do YOU think about the Xbox One coming to China? Let me know in the comments below!
*The Dreamcast used a optimized version of Windows CE which was fully Div X compatible. It took over two years to develop, and this was a large factor in both the huge development cost of the system and it’s high sticker price, which ultimately lead to its downfall.
**Anti Japanese sentiment in China can’t be overstated. Protests and rallies in support of rejecting everything Japanese still happen to this day, when you think they would have bigger problems to worry about.
***This is a resent change, and like all things China, hard to make a definitive statement about. While China’s leadership is STRICTLY an atheist organisation they recognize religion as a strong pillar of a functioning society and have allowed the practice of the two religions mentioned, as well as Islam, Christianity, and Protestantism. Actions by Xi Jinping starting in 2012 seem to be eliminating these 3 religions in favor of the “traditional” values of Buddhism and Taoism.
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