Console Game Availability Shifts in China's Market

Within China, the world’s largest gaming market, console gaming represents a comparatively minor segment, generating significantly less revenue than mobile and PC gaming over recent years – based on officially reported figures. While a dedicated community of console enthusiasts remains, obtaining both hardware and game cartridges has become increasingly challenging.

Recent Disruptions in the Grey Market

Several vendors of videogame consoles operating within the grey market on Taobao have ceased sales and shipping operations this week, as observed by TechCrunch and reported by gamers online. Before delving into the potential causes of this situation, understanding the historical context of the industry is crucial.

A History of Restrictions

In the year 2000, China implemented a ban on the sale and importation of videogame consoles, driven by concerns regarding potential addiction among young people. Despite this prohibition, imported consoles continued to be available through the grey market, catering to a loyal player base. Simultaneously, the online PC and mobile gaming sectors experienced substantial growth, fueled by their affordability and the social elements inherent in their design.

The Lifting of the Ban and Subsequent Challenges

The restriction on consoles was eventually lifted in 2015, prompting major players like Sony and Microsoft to introduce Chinese versions of their products through local partnerships. The Nintendo Switch arrived on Chinese shelves in 2019, facilitated by a collaboration with Tencent, the world’s leading gaming company. However, the grey market persisted, as mainland Chinese console versions are subject to stringent regulatory scrutiny, limiting user options to a select range of titles approved by censors.

Consequently, many Chinese gamers turned to physical electronics stores and online marketplaces to acquire imported editions of PlayStation, Xbox, and Nintendo Switch, along with their corresponding games. These products typically enter China through parallel trading, involving the import of legitimate goods via unofficial channels.

The Issue of Licensing

The games imported through these channels generally lack a Chinese gaming license, which is notoriously difficult for even domestic publishers to secure.

Current Status of Taobao Vendors

The extent of console and game removals from Taobao, and the reasons behind this action, remain unclear. Tgbus, a prominent console game seller on Taobao with 462,000 followers, currently displays no product listings. A customer service representative stated the store had temporarily suspended shipping due to “a water leak in the warehouse.” Further inquiry revealed the issue was attributed to “an electrical-equipment failure.”

Other vendors offer ambiguous explanations, citing “special reasons” for service interruptions. One seller, “Shanghai Gaming Console Store,” indicated it suspended operations at Taobao’s request, without providing further details.

Alibaba has not yet responded to requests for comment.

Impact and Alternative Platforms

The current situation primarily affects console sellers with significant business volume. Imported cartridges and console devices are still available on smaller Taobao stores and alternative platforms like Pinduoduo, provided the correct keywords are used in searches.

Possible Motivations

Some observers believe this move represents a tightening of control over the games available to Chinese players. Over the past year, Apple’s China App Store removed thousands of games to eliminate those lacking official Chinese approval. Political factors may also be at play, as seen with the removal of Animal Crossing from grey market stores following its use by a pro-democracy activist in Hong Kong as a platform for protest.

Others suggest that customs officials are routinely cracking down on parallel trading, which aims to circumvent import taxes by having goods carried by individuals posing as regular travelers. This is not the first instance of disruption to the console grey market. Certain goods manage to avoid detection until they reach substantial sales volumes.

Recent increased interest in the new Monster Hunter Rise, a Nintendo-Switch exclusive unavailable in the Chinese console edition, may have spurred increased imports and attracted attention.