18 Feb 2015

Cheap Gaming Consoles for Emerging Markets

We’ve already seen the rise of cheap basic mobile handsets. Now there’s talk of bringing out low-cost gaming consoles for emerging markets.

But is this the right strategy for gaming companies hoping to move into emerging markets?

Nintendo has announced plans to develop a new gaming console specifically targeted at emerging markets. The company aims to market the console in those markets where gaming is not yet widespread and where disposable income is generally lower.

On the assumption that the emerging market consumer will have less income available for gaming, the idea is to design an inexpensive gaming console with a basic controller, lower spec hardware, and probably games which are not in high definition.

China

China seems to be a target market for Nintendo’s device. Gaming is already well established in that market but for years there has been a ban on foreign games consoles being imported into the country; this ban has now been partially repealed. There’s been no such restriction on consoles produced domestically and China has a massive market for both mobile and desktop gaming.

It’s a tough environment to work within with a lot of censorship and regulation. Although it’s easy to predict that games with an overtly political message might meet with disfavor, some censorship is more subtle and harder to predict. Minor graphical elements that are seen as being at odds with traditional Chinese culture can meet the wrath of censors – although the same element in a locally-developed game may pass without any problems.

China’s authorities strongly believe in the power of games and other media to wield influence on hearts and minds in China, and fear external influences above all others. Their stance on game content seems to be supported by Chinese parents, who are particularly concerned about the influence of games on their children. It makes for a difficult regulatory environment, and one that is often biased in favor of local gaming enterprises.

Sony’s recent launch of the PlayStation 4 console in China has been delayed by government interference with the launch details. Although China represents a huge potential market, the odds seem to be stacked against foreign console manufacturers getting established in this market.

What about other emerging markets and their potential for console gaming?

India

India’s gaming market is healthy and it’s thought this industry will grow at over 30% annually for the next few years. Local tastes tend towards games themed for Bollywood and cricket, and there’s a preference for simpler games that don’t require high internet bandwidth and which don’t take up a lot of storage space.

It’s thought Nintendo’s Xbox One sold poorly in India at launch whilst rival Sony performed much better with sales of the PlayStation console in this market. Sales of the PS console exceeded 10 million in less than a year, suggesting there is a market for console gaming in this country.

Brazil

In Brazil, mobile and free games are popular but console gaming makes up only a tiny part of the country’s games market. Because the physical consoles are the only part of the lively gaming market that can be pinned down and taxed, the tax burden on consoles is considerable.

This taxation has been a real obstacle to console manufacturers hoping to get established in Brazil. Nintendo is pulling out of the Brazilian market, blaming high import taxes. When the PlayStation console retailed at gob smacking prices in Brazil, Sony explained that a whopping 63% of this shelf price was accounted for by taxes.

The games manufacturer is now trying a different approach; manufacturing the console locally in a bid to avoid some of the tax burden of importing it.

Whilst gaming is popular in Brazil it’s clear the strategy still needs to be refined in order for console gaming to be profitable. Nintendo’s cheaper console device may face difficulties there, irrespective of its lower price relative to HD devices currently on offer, due to the taxation burden and no proven market for games consoles.

Russia

Gaming is big in Russia, but it tends to be on mobile. It’s thought a typical Russian gamer is urban and mature and plays games on their smartphone during their commute to work. Console gaming is a minority sport compared to tablet and mobile gaming. An astonishing 75% of games are thought to be pirate copies, which suggests piracy could be a major obstacle to making profits in this market.

The picture emerges that whilst it isn’t impossible for console manufacturers like Nintendo to crack emerging markets, it could be more difficult in some markets than others and different markets have different obstacles to success. Some foreign gaming consoles and games have already succeeded at penetrating these markets. When sales of consoles have been permitted within China’s Shanghai free trade zone, they have sometimes done well.

Microsoft’s Xbox One apparently sold 100,000 units on the first day of sale while Sony has done well in India with the PlayStation.

Issues and concerns

In China however, it remains to be seen whether any of the huge gaming console manufacturers can overcome the obstacles and triumph despite the prevailing market conditions.

Piracy remains a concern both here and in Russia. Apart from the obvious concerns about copyright theft, rampant piracy has had the effect of creating a customer base that is accustomed to paying very little for games. Whether this has eroded the market to such an extent that it is no longer profitable to operate remains to be seen.

It’s also the case that many emerging market gamers have become accustomed to playing without console platforms and are used to using mobiles and PCs. This begs the question whether the demand is there for console gaming, especially in markets like Brazil where taxes on consoles make them prohibitively expensive compared to other gaming platforms that consumers are more accustomed to.

It could be argued that emerging market economies are too established in their gaming habits to introduce costly new platforms, even the cheaper versions that Nintendo seems to be proposing.

The answer perhaps is to offer something more than mere gaming when approaching emerging markets. Nintendo, which started life 120 years ago as a playing card manufacturer, is planning to redefine its position as an ‘entertainment’ company with a whole new generation of lifestyle products.

These will include tech products that will apparently aim to improve the user’s quality of life by helping them to maintain healthy habits, although not much detail is given as to how this will work.

We’ve already seen emerging markets ‘leapfrog’ the desktop computer and landline phone and skip straight to mobile for their communications needs. Possibly we’re going to see a similar pattern emerge with the gaming industry, where the market avoids the sole-purpose gaming console stage altogether in favor of a multi-purpose gaming device such as mobile gaming or even Nintendo’s mysterious new platform.

Regardless of the platform, gaming is set to explode in developing markets and as a result, video game titles are likely to require translation into an even larger number of languages in the future as growth continues. Good news indeed for technical translators and agencies and of course, gamers themselves.



 
 

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