First it was PCs, then it was mobile and now the new frontier in online video games is in the living room. As penetration of broadband internet rises, various online game developers are teaming up with telecommunications equipment makers to launch their own consoles for TV-set-based games.
The latest local offering is from ZTE Corp. (00763.HK), a telecoms equipment maker that linked up with mainland video game company The9 to develop the FunBox micro-console. The box retails for 698 yuan (US$113) and is designed not just for games but also for video-chatting.
The FunBox offers more than 200 game titles from Shanda Games, Sohu.com Inc., Electronics Arts and Take 2, and also connects to mainstream TV channels via China International Broadcasting Network.
With this strong content line up, ZTE and The9 aim to sell 3 million units in China this year, one-third of which are expected to be sold through JD.com, a leading consumer electronics e-commerce platform.
ZTE rival Huawei Technologies has also unveiled its game console product The Tron, a cylindrical console running on Google’s Android operating system. It’s likely to be priced around 1,000 yuan.
On top of that, TV maker TCL Multimedia (01070.HK) is also partnering with Shenzhen-based game developer ATET to launch game consoles and a dedicated TV set for games.
The activity being driven by the big opportunity Chinese tech firms are sensing in the local video game market. According to Huawei, China has about 400 million people who play video games but most still play online on their personal computers. Luring these players over to home video games that can be used with a TV and played in the living room could be a source of real growth.
Capturing a place in the living room is a strategic move for consumer gadget makers of TV sets, set-top boxes and game boxes, because the hardware could be key to dominating home entertainment. People still look to the TV screen for entertainment much more than they seek out online movies, play video games and even browse the internet for leisure.
Game developers are also seeing the video game market as the next growth engine as high growth in the mobile market peaks soon. The shift is expected to be all the easier for mobile developers because, just like many smartphones, the bulk of the game boxes on the market run on the Android platform.
Given the low entry barrier to the video game business, timing will be an important criterion for determining whether game developers succeed. The first-mover advantage will go to those aboard the new game box launch. But that won’t be enough – the next challenge will be to build a sustainable business model that generates recurring and adequate revenue streams.
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