Sony Interactive Entertainment Shanghai announced April 29th that it will launch the PlayStation 5 in Mainland China on May 15, 2021. The disc version of the PS5 will cost RMB 3,899 and the digital version will cost RMB 3,099. Sony announced that it was currently preparing Ratchet & Clank: Rift Apart (Sony), Sackboy: A Big Adventure (Sony) and Genshin Impact (miHoYo) for the launch period, but we note that only Genshin Impact has received a license to officially launch in the country. Sony aims to strengthen its offering by including 12 PS4 games as part of the PlayStation Plus collection for members of its PlayStation Plus service.

The launch of the console is welcome news for PlayStation fans. The console has been highly anticipated by fans since it launched in the rest of the world in November last year. Pre-sales for the console started on April 29 at 12pm across online retailers such as JD, Tmall and Suning. A non-refundable deposit between RMB 100 and RMB 500 (depending on the retailer) was required. The console offers a two-year warranty in China compared to a one-year warranty with consoles sold elsewhere. Pre-orders sold out within 20 minutes across JD and Tmall, with total units exceeding 50,000. This is reminiscent of demand for the Nintendo Switch which also sold out when its official launch was announced for December 2019.

“Demand for PS5 has been high in China since it launched outside the country in November 2020,” Daniel Ahmad, senior analyst at Niko Partners told CNBC. “Console gamers in China that could not wait had to pay almost double the RRP (recommended retail price) if they wanted to import a console from overseas,” Ahmad said, adding this was due to shortages of the product and high demand driving prices higher. The current price of an import PS5 console is over RMB 5,000, which is notably higher than the retail price announced for China. We expect most gamers to opt for the official China version of the console going forward given its lower price point. However, we expect the China version to face the same supply issues as the global version, which will limit the initial install base.

The PlayStation 5 will face competition from the Nintendo Switch in Mainland China, which has been the most successful console in the country to date. The hybrid nature of the Switch, social gaming features and high-quality software helped it succeed in China. Sony also has a strong first-party offering, and it has worked with domestic game developers such as Ultizero Games to bring unique titles such as Lost Soul Aside to increase the console’s appeal in China. Steam is also a notable competitor to the PS5 in China as it will offer most of the third-party games coming to PS5, not to mention that Steam allows core gamers a wide variety of AAA PC games in China where PC gaming far exceeds console gaming. Gamers will be able to play these games on their existing PC or at an internet café. Exclusive content will be key for the PlayStation 5 to appeal to gamers in China. Further investment from Sony in its China Hero Project, which aims to bring locally developed games to PlayStation, is one way to achieve this goal.

Consoles are still niche in China due to many factors (high price, strong regulations, very few titles approved with an ISBN license overall, and a strong tendency to play PC games or mobile games rather than console). If Sony can address these challenges and appeal to the evolving demands of gamers in China for more choice in AAA gaming the company should find success with PS5 there, especially as disposable income for entertainment and gaming time increases in the country. As with everything in digital entertainment, content is king and the games that are allowed will dictate whether or not sales are strong.

Niko will release our 2021 China Console Games Market report with a comprehensive market model and 5-year forecast through 2025 at the end of May