Sony's PS4 hits China but with few games

The PlayStation 4 debuted Friday in China, but with few games and bare-bone online services as Sony navigates tight censorship rules to get a toehold in the world’s biggest gaming market.

While the Chinese consoles are physically identical to those Sony sells worldwide, they have no access to music, TV shows and movies, and a library of just six games approved by authorities. That’s compared with almost 200 titles on Japan’s PlayStation Store.

Chinese players won’t have “Call of Duty” or “Grand Theft Auto,” the top-selling games last year, according to VGChartz.com.

Sony and Microsoft Corp. — drawn to a market that International Data Corp. forecasts will reach $22 billion in 2017 — are entering China after the government lifted a 14-year ban.

The companies must convince a generation of gamers who grew up with free-to-play titles on smartphones and computers to buy consoles that cost more than the average worker’s monthly disposable income.

The PS4, which increasingly utilizes cloud-based gaming services such as PlayStation Plus, must also contend with China’s “Great Firewall” of Internet controls, as well as restrictions on violent, sexual and political content.

“The traditional game business model has no upside when it comes to China because most gamers are on PCs and not used to paying $60 per title,” said Atul Goyal, a Singapore-based analyst with Jefferies Group LLC. “Digital is the only future for China. Even if Sony sells a million units, we would have to look at the uptake of its paid PlayStation Plus.”

The service, which allows PS4 users to play online and costs about $10 a month in the U.S., will be available with limitations in China, said Takehito Soeda, who oversees PlayStation’s strategy in the country. He declined to elaborate or provide a price.

“PlayStation is first a gaming device, and that’s what we are focusing on for the launch,” Soeda said. “We are also considering opportunities when it comes to social networks popular with Chinese users. Video services require a bit more study because that’s a tightly controlled area.”

Buyers started lining up outside the Sony store in Beijing’s Oriental Plaza mall at 7 a.m. When the gate lifted three hours later, more than two dozen shoppers walked straight to the counter to buy the consoles.

First in line was Alex Liu, a 21-year-old college student who spent 4,900 yuan (about ¥95,000) on the console, a game called “Dynasty Warriors” and a handheld PlayStation Vita.

Liu said he already spent more than 10,000 yuan on foreign versions of the console and games, including most of the six titles released in China. Still, he wanted the Chinese versions.

“I believe in the future of PS4 in China,” Liu said. “I came to support Sony so they can bring more games next year and the year after. Online games can never meet all of our needs.”

The China push comes as Sony shifts focus to selling streaming services to its more than 50 million active online users. Last year, the company rolled out a premium PlayStation Now game streaming service in North America for $19.99 (¥2,400). This week, it released a console-based pay-TV service, Vue, in New York, Chicago and Philadelphia.

The PS4 is key to Chief Executive Officer Kazuo Hirai’s plan to raise profits to the highest level since 1998 by emphasizing games, entertainment and image sensors over consumer electronics.

The console sold 20.2 million units as of March 1, Sony said earlier this month, making it the top seller among the current generation of players. That is compared with 11.6 million for Microsoft’s Xbox One and 9.3 million for the Nintendo Co.’s Wii U, according to VGChartz.com.

“I’d be surprised if Xbox One and PS4 together sold over 1 million units in mainland China in 2015,” said Lewis Ward, research director for gaming at IDC. “If they get China right, the potential to make billions of dollars five years from now is there.”

The console ban helped produce a big gray market for game hardware and software in the country, Ward said. Titles that would cost $50 can be bought for a few bucks, one reason why free-to-play games became so popular.

The PS4 will sell for 2,899 yuan and the handheld PlayStation Vita will cost 1,299 yuan, Sony said. That compares with about 2,400 yuan per capita disposable income for an average urban resident, according to government data.

Microsoft, which in September became the first foreign console vendor to enter China, hasn’t released local sales numbers for the Xbox One. Chinese vendors ZTE Corp. and TCL Multimedia Technology Holdings Ltd. plan rival products.

Xbox players in the country also face a limited game selection, with only 10 released when the console debuted. Microsoft said it and partner BesTV New Media Co. will cooperate with the government to meet regulations.

The initial lineup for the PS4 includes Sony’s “Knack” and Square Enix Holdings Co.’s “Final Fantasy.” About a dozen more titles await government approval, and Sony is working with 26 Chinese companies to develop games.

“A lot rides on how rich of a software portfolio you can offer to users, so we intend to find the right blend of overseas titles and games developed in China,” Soeda said. “We are creating a console market from scratch here.”