Sony to sell PlayStation consoles in China

Sony Corp took steps toward selling PlayStation gaming consoles in China as Chief Executive Officer Kazuo Hirai seeks to tap players in the world’s largest market and help rebound from a projected sixth loss in seven years.

Sony agreed to form two ventures with Shanghai Oriental Pearl (Group) Co, owner of the Oriental Pearl Tower, to start making and selling PlayStation consoles after China lifted a 13- year ban on sales of the machines. Sony will have a 70 per cent stake in one venture and 49 per cent in the other, according to a statement filed with the Shanghai Stock Exchange.

The move by the Tokyo-based company comes after Microsoft Corp announced plans to sell its Xbox One machine in China, and Nintendo Co said it plans to expand in emerging markets with new devices. China’s video-game industry will generate about US$10 billion (RM32.1 million) in sales next year, according to PricewaterhouseCoopers LLP, and console makers are trying to distract Chinese players from games on their smartphones and tablet computers.

“Sony entering the China market can broaden sales,” Ryosuke Katsura, a Tokyo-based analyst at UBS AG, said by phone. “PlayStation 4’s online game network service can help the company avoid piracy issues that are more prevalent with packaged games.”

Sony rose 3.7 per cent, the most in almost two months, to ¥1,692 yen by 10:55 am in Tokyo trading. The shares are down 7.3 per cent this year, compared with the 8.5 per cent drop on the Topix index.

Shanghai FTZ

In September, Shanghai inaugurated a free-trade zone with more relaxed financial and investment controls as China seeks to unleash market forces in the world’s second-largest economy. That’s helping attract companies from console makers to banks.

Nomura Holdings Inc, Japan’s biggest brokerage, signed agreement earlier this month with Shanghai Lujiazui Financial Holdings and others to form a venture in the free-trade zone.

“We think mainland China is an attractive market, we will consider various possibilities in the market,” Satoshi Fukuoka, a spokesman for Sony, said by phone.

Fukuoka declined to comment on whether Sony will sell the PS4 or design another console for China, and he also declined to comment on the timing for starting sales in China.

Piracy battle

Japan’s No. 1 TV maker unexpectedly forecast a ¥50 billion-yen (RM1.6 billion) net loss this year as slumping demand for its sets and video cameras was compounded by the costs of restructuring and exiting the personal-computer business. That further set back Hirai’s plans to revive the Japanese icon by using the PlayStation and Xperia smartphones to lure consumers away from Apple Inc and Samsung Electronics Co.

Console makers may face an uphill slog to get a generation of gamers grown used to a free online model and increasingly migrating to mobile devices to pay hundreds of dollars for hardware. The companies also will have to battle rampant piracy of movies, music and games.

“Without any assurance that their intellectual property will be respected, it is difficult to see how any manufacturer can make money in China,” Michael Pachter, an analyst at Wedbush Securities in Los Angeles, said in an e-mail today.

“Microsoft has partnered with a television broadcaster, and hopes to sell its console as a multimedia device. I am sure Sony has similar plans.”

Microsoft and BesTV New Media Co, a subsidiary of Shanghai Media Group, formed a US$79 million gaming venture in September to reach Chinese consumers.

Nitendo Device

TCL Multimedia Technology Holdings Ltd said in April it will make a game player, the T2, that features a joystick that’s compatible with mobile games for Google Inc.’s Android system so they can be played on any TV.

The PlayStation 4 beat Microsoft’s Xbox One to first place in US console sales in April, extending its lead for a fourth month, according to Port Washington, New York-based NPD Group Inc. Games like the PS4’s Killzone Shadow Fall are helping drive demand among hard-core gamers.

“In China you don’t need to have a large market share to hit your numbers,” said David Rubenstein, a managing director at Advanced Research Japan in Tokyo. “You just need a few million enthusiastic gamers.”

Nintendo President Satoru Iwata said this month the Japanese video-game company plans to expand in emerging markets with new devices starting next year. The Kyoto-based company will develop completely new game machines for emerging markets rather than sell cheaper versions of existing devices such as the Wii U, Iwata said in a May 8 interview.

Nintendo is studying the regulations regarding entry into China, Iwata said in a May 7 interview. Yasuhiro Minagawa, a spokesman for Nintendo, said the company has nothing more to disclose regarding sales in China.

Via - Bloomberg