Price is Xbox One's 'drawback' in China: Analyst

Updated: 2014-09-30 06:49

By SHI JING in Shanghai and JACK FREIFELDER in New York(China Daily USA)

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Price is Xbox One's 'drawback' in China: Analyst

Fans wait for the launch of Microsoft Corp’s Xbox One game consoles at a Suning outlet in Shanghai on Sunday evening. [Liu Xin / For China Daily]

Microsoft Corp's Xbox One flagship gaming console went on sale this week in China, but its price tag may be its biggest drawback, according to an analyst.

"Our research has basically indicated that the biggest drawback in this whole cycle has really been the price point that Microsoft has [set]," Brent Thill, managing director of software research for global financial services firm UBS AG, said Monday in an interview with China Daily.

Thill said few consumers have been swayed by the belief that the Xbox One is "materially better" than other leading gaming console devices, like Sony Corp's PlayStation 4, so the price has been one of the biggest issues that "has hurt Microsoft".

The console, which is available at more than 4,000 retail outlets in 37 cities, is priced at 3,699 yuan ($602) without the Kinect motion detection system and at 4,299 yuan with it. The console retails for $399 in the US.

Thill also said Microsoft is facing "a usability factor."

"The hardcore audience is not going away and that will always be there, but I think the mass market is shifting toward a completely different consumption model," he said. ``We're going through shorter bursts of gaming, where [people] want to play while [they're] on a bus, train, etc, and I just see that as a general direction."

While saying that "first and foremost, China is a really important market that Microsoft has not addressed," Thill said "it's going to be difficult."

"If you look at what has happened here in the US, as you go international I'm somewhat skeptical but this part of the business has not really been the driver for Microsoft overall. The Xbox business is not going to materially change the outlook for investors, but this business is nice to have," he said.

Although the original launch of the Xbox One in China was delayed for a week, from Sept 23 to Sept 29, Microsoft said the move is "just the beginning" of its marketing plan in China.

Due to government officials' concern over unsavory content, a moratorium was placed on video game consoles back in 2000, but the 14-year ban on gaming consoles in China ended on Monday with the launch of Microsoft Corp's Xbox One.

The launch also coincided with the first anniversary of the China (Shanghai) Pilot Free Trade Zone.

Approval for the production and sales of game consoles has been one of the high-profile developments in the zone, and a joint venture between Microsoft and BesTV New Media Co became the first company registered in the FTZ nearly a year ago.

Zhang Dazhong, chairman of E-Home Entertainment Development Co Ltd — the joint venture between BesTV and Microsoft — said the introduction of game consoles to the Chinese market is "the best gift" to mark the FTZ's first birthday.

Xbox One is also available from online retailers such as Inc, Gome Electrical Appliance Holding Ltd and Suning Commerce Group Co Ltd at the same prices as at brick-and-mortar stores. However, only 10 games are being provided for the console at this time, and video services are excluded.

Xie Enwei, general manager of Microsoft's greater China region, said that more games would be provided within a few weeks or months. E-Home is developing some 70 games for the Chinese users.

In May, Japan's Sony Corp set up two joint ventures in the FTZ for the production and sale of its flagship console, the PS4. However, Sony, which is Microsoft's largest competitor in the gaming consoles industry, has not announced when it will release its PlayStation consoles.

Thill, the analyst with UBS, said: "I look at the whole movement toward mobility in gaming, and I think Microsoft and CEO Satya Nadella get that. That crossover to me is really compelling, and I think Microsoft will do a really good job of creating this seamless balance between all the devices."

"The cross-platform gaming is going to stay, and the new CEO really understands this," he said. "But as good as Microsoft is, there's a duopoly [there in China with Sony], so Microsoft is going to have to make some radical changes to adapt."

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