China: Updated forecast for the Chinese video games industry: mostly sunny, with a high chance of clouds

Last Updated: 12 July 2014
Article by Mark Schaub and David Hong

As we explored in our February 2014 article, "Free Trade Zone has Silver Lining for Gaming Companies," China has loosened its ban on the sale of video game consoles and games to domestic consumers. Under new policies of the Shanghai Free Trade Zone, video game manufacturers will be allowed to produce both consoles and games for sale to Chinese consumers for the first time since 2000.

This relaxation of the ban does not mean that controversial games like Grand Theft Auto will be released in China anytime soon. New regulations were released on April 21, 2014 which describe the approval process for video game manufacturers and also the categories of video game content that remains off limits.

As the Head of the Ministry of Culture recently stated, "We want to open the window a crack to get some fresh air, but we still need a screen to block the flies and mosquitoes." While this "screen" may block out many of the world's best-selling video games that contain violence and other controversial content, there is still plenty of reason for optimism on the part of video game manufacturers and fans alike.

New Regulations

On April 21, 2014, the Shanghai Municipal Administration of Culture, Radio, Film and TV ("Administration") released the Rules for the Implementation of the Program for Opening up the Cultural Market in the China (Shanghai) Pilot Free Trade Zone ("Rules"). Highlights from the Rules include:

  1. Foreign companies may produce and sell video game consoles and games in China, provided they pass the content review process of the Administration. It should be noted that foreign companies are still required to partner with a Chinese company and operations must be located in the FTZ.
  2. The standard for content review will be Article 13 of the Entertainment Venue Management Law. Off limits video game content is broadly phrased and covers expected topics such as violations of China's constitution and threats to China's national unity, sovereignty, territorial integrity, reputation, security, or interests. Anything that instigates racial/ethnic/religious hatred (including promoting cults or superstitions). Content that promotes anti-social behavior such as obscenity, drug use, violence, or gambling.
  3. According to the Rules, the review and approval process should take 20 workdays. Games not approved will be returned with the reason for rejection clearly stated.
  4. Any material change to game content, including any new downloadable content, must be submitted for review and approval even if the parent game has already been approved.
  5. In-game text and instructions must be in simplified Chinese.

There are a number of reasons the Rules will be welcomed by video game makers, including that the application review will be conducted by the Shanghai Municipal Administration of Cultural, Radio, Film, and TV, and not the Ministry of Culture in Beijing. At least as a matter of perception, the Ministry of Culture is thought to be a stricter censor.

The process has been greatly streamlined from the previous 80-day process for online games. Furthermore, the undertaking to provide reasons for rejections should facilitate game makers re-jigging questionable content and resubmitting for approval.

The vague and expansive categories of restricted content that are contained in Article 13 of the Entertainment Venue Management Law, however, will likely complicate matters for many video game developers. Many of the most popular video games are "first-person shooters" which would be clearly seen as something promoting violence. Other listed prohibitions are sufficiently vague and unclear.

Game developers will need to wait and see some applications reviews before an opinion will be able to be formed as to how liberal or otherwise the authorities will be.

The requirement that games must be in simplified Chinese is not unexpected and, to be fair, mirrors broad consumer law requirements within China. The provision will prevent game makers from reselling games released for sale in Hong Kong or Taiwan without first making changes to the in-game text, but this issue is unlikely to be considered major.

Gaming Console Giants Enter Chinese Market

Following the lifting of the ban on video game consoles and games, the three major console manufacturers (Microsoft, Sony, and Nintendo (the "Big Three")) have already announced plans or have expressed heavy interest in entering the Chinese market.

Microsoft appears set to become the first of the Big Three to launch in China. In late 2013, Microsoft entered into a $237 million joint venture with the Chinese company BesTV. The companies recently announced that the Xbox One will be released in China in September of this year.

While the Big Three undoubtedly see the nearly half a billion Chinese who play video games as a tremendous opportunity, it will be important for them to temper expectations due to existing competition from cheaper, popular alternatives in PC and mobile gaming and an existing black market for consoles.

Sony will likely be close behind Microsoft as the Japanese company announced on May 21 that it was forming two joint ventures with Shanghai Oriental Pearl. One of the joint ventures will be responsible for the console's hardware, while the other joint venture will focus on software.

While a Nintendo console release is not as imminent, Nintendo has stated that the company plans to expand into emerging markets with new devices starting next year and the company is currently studying regulations regarding market entry into China.

Domestic Challengers

The Big Three gaming console manufacturers are not the only ones trying to cash in on the new opportunities for video game consoles in China. Like many multinationals are finding to their chagrin, Chinese companies are moving from making products for others to making their own and often these products provider equivalent or better functionality at a much better price point. ZTE, the Chinese telecommunications equipment supplier, formed a joint venture with The9, a Chinese video game company, to release a new micro-console called the FunBox. The Android console, along with a controller, is selling for only RMB 698 ($112) which is significantly less than the $399 price tags for the Xbox One and PlayStation 4 in the United States.

Huawei has also announced plans to enter the video game market. The company recently unveiled its new console, the Tron, and intends to begin sales in China in the second quarter of this year. While the company has not finalized a price, Huawei believes the Tron will likely cost less than RMB 1,000 ($160).

Chinese electronics maker TCL is also planning its own video game console for the Chinese market, but a launch date and sale price have yet to be released.

While ZTE, Huawei, and TCL do not yet have the same global reputation for video gaming like Microsoft, Sony, or Nintendo, these domestic companies may prove to be very successful with more budget-minded consumers, especially those accustomed to the cheaper options of PC/mobile gaming and pirated consoles.

To the Cloud

As discussed in our February article, the gaming industry appears to be advancing from traditional console-based systems to cloud-based systems and this evolution will likely occur even more rapidly in China. China already has a strong and growing cloud industry. According to the China Information Industry Net, the Chinese cloud market was worth USD $1 billion last year. Currently, Alibaba's Aliyun dominates much of the cloud market but foreign companies are seeking to establish a presence in the industry.

Microsoft officially launched Microsoft Azure this past March, making Microsoft the first foreign company to offer a public cloud service in China. During their trial period, the Azure platform accumulated over 3,000 customers, including several large Chinese businesses like Coca-Cola China and China Network Television.

Amazon has also been successful in luring Chinese companies to its cloud system, Amazon Web Services, during its limited preview for its new Beijing region. IBM has announced that it will join Microsoft and Amazon in this increasingly crowded market.

Sony's cloud-based gaming platform, PlayStation Now, will enter open beta testing for the PlayStation 4 on July 31. PlayStation Now allows users to stream older and current PlayStation games on a variety of devices.

Sony will test a number of different pricing models for this new service, including short-term rentals priced as low as $2.99 and long-term rentals ranging from $2.99-$19.99. Subscription models are also being considered and will likely be implemented in the future. Amazon has its own cloud-based system, Fire TV, which also allows users to stream games at an average price of $1.85. However, it is too early to tell if these models will be implemented (or if they will even work) in China.

While the potential for cloud-based gaming is significant, the technology is still largely unproven. Internet speeds have increased considerably over recent years which enable video game streaming, but video games that require fast reflexes may still be unplayable due to lag times from insufficient internet speeds. The potential for system outages also could create difficulties for gamers who are accustomed to the reliability of console and PC-based systems.


All in all, the recent changes in regulations greatly improve the opportunity for video game companies to build their businesses in China. From first glance, some of the new regulations seem to place restrictions (i.e. content guidelines), but actually, such regulations are less in the manner of restrictions and are an indication that the Chinese authorities are building an infrastructure to deal with video games that are sold in China. Given its affordable pricing model and also the difficulties in pirating games, cloud based gaming is likely to be attractive to consumers and video game companies alike. However, success will largely depend upon how China's infrastructure will continue to meet demands for quicker, better access. Over time it seems a safe bet that cloud based gaming will have a very bright future in China.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions