Game consoles in China: the tortoise or the hare?

A mandatory filing has finally given away the game: Sony is planning to start making Playstation 4s for China starting in December of this year. The Japanese console doesn’t actually have a launch date according to Bloomberg, and it’s likely the console won’t hit store shelves in China until early 2015. But the filing does give away another tidbit: Sony is planning to produce just 200,000 consoles per year for the Chinese market.

Clearly, Sony is taking a markedly different approach from Microsoft when it comes to China’s nascent next-gen console market. Where the American tech company rushed in, making its Xbox One the first game console to launch in China in over a decade, Sony has been more cautious. And where Microsoft hopes to sell one million Xbox Ones to China in the console’s first year, Sony is apparently content with selling one-fifth of that.

In other regions, being the first console to market has sometimes conferred a significant advantage. Since most console gamers are likely to purchase just one console or the other rather than both, having the first one available can help a company profit from the next-generation hype. And Microsoft’s Xbox One seems to be doing well so far; it sold 100,000 units on launch day (including preorders). It seems to be selling decently on Taobao, which is always a good sign. But Sony, obviously, is happy to play the tortoise to Microsoft’s hare here, entering the market later and more gradually.

In this case, it may be the right move. I’ve been arguing forever that China’s console market is not going to be the windfall some pundits are hoping for. If I’m right, Microsoft’s larger investment into production and marketing could backfire while Sony’s more prudent plan pays off.

It’s also worth mentioning that all products are not created equal. Microsoft’s Chinese Xbox One is riddled with restrictions, and although the same may ultimately prove true of Sony’s console, online polls suggest that Chinese gamers are much more interested in the Playstation 4 than they are the Xbox One.

This race may be too early to call, but I’m putting my money on Sony. China does not have a console gaming culture, and while one may develop eventually, for the time being consoles are going to be a niche market. Sony’s slower approach should allow it to gradually build an install base in China without requiring the kind of massive investment that demands a quick return. And hopefully, the company has already learned from a few of Microsoft’s mistakes in launching the Xbox One so that it can avoid them when the PS4’s time comes.

A year from now, I don’t think either console’s sales will have set the world on fire, and the average Chinese gamer will probably be doing the same thing they’re doing right now: playing PC games like League of Legends. But Sony may have carved out a nice niche and a strong brand for itself, whereas I fear Microsoft may find itself with a lot of consoles on its shelves gathering dust.