Microsoft Invests in Electronics Manufacturer

I don't really have anything to say at this point, simply noting the event. It is a little odd that whatever Changhong Electric Company does, that $12 Million is one percent is telling. I don't know much about this company, and their corporate website is adequately vague.

What I can tell is that Changhong is not yet a "developer" and rather is an electronics company. It makes more sense now.

Taken from the corporate website of Changhong

CHANGHONG commits itself to product innovation in the electronics industry. CHANGHONG has a state-level technology center and a first-rate scientific research workstation for post-doctors who work together to develop cutting edge technologies. CHANGHONG has established many joint laboratories with, Toshiba, Sanyo, GE, Microsoft, TI, Samsung, LG, and Philips etc. CHANGHONG also has established R&D centers in Shanghai and Shenzhen in China, American Silicon Valley, and Japan. CHANGHONG’s goal is to actively participate in the development of a global digital industry.

Joystiq - Microsoft invests in Chinese developer

Microsoft has purchased 15 million shares in Sichuan, China-based Changhong Electric Co., valued at 94 million yuan (about US $12 million). That's just one percent off the company, according to the Taipei Times.

Despite Nintendo's Piracy Concerns...

It looks like the Chinese market is doing pretty well for the moment. The gaming cafe experience is something that I saw a bit of in India, but not nearly the social force that it seems to be in China and other parts of South Asia. I think one of the key bits that spells a major difference is the rise in sales of offline PC games, which would be the easiest for piracy efforts.

It is interesting that despite Nintendo's threat, I don't believe that officially the DS or Wii is actually being marketed in China. I could be wrong, but the fact that most of it is on the Grey market doesn't surprise me. The same was largely true in India with the notable exception of Microsoft who was investing in marketing the Xbox 360 heavily.

In related news, it looks like they're issuing similar statements to those made to China to Korea. Shape up seems to be the gist of it. Korea is a market where the DS is being pushed by Nintendo, so I can see their interest in protecting their margins.

Chinese game market explodes // GamesIndustry.biz

The report found that revenue from the overall video game market jumped by 68% last year, with the online gaming sector generating USD 995 million in revenue, an increase of 74% from the previous year.

Unsurprisingly, the report singled out China's booming internet cafe culture as the main driver for this growth. The introduction of free-to-play massively multiplayer online games - in which players pay for virtual items - has, according to Niko's managing partner Lisa Cosmas Hanson, further stimulated this trend.

"Chinese gamers pour into the cafes every day to play online and LAN games with friends. They spend money in the games on virtual gifts for friends, services for their characters, and virtual items to help with leveling," said Hanson. "The intertwined nature of China's Internet cafes, social gaming culture, and few entertainment alternatives at a low price point, will continue to be the basis for strong growth through 2011."

But the Niko report goes on to paint a picture of overall good health for the Chinese market. Sales of offline PC games, mostly from Taiwan, rose 28.5 per cent to 904,000 units in 2006. And alongside the 20 million PCs in China's 225,000 internet cafes are an increasing number of consoles, although these are all grey imports, console hardware currently being prohibited in China.

Hanson added: "If a game company can get an impressive game or console to market in China, the gamers there will embrace it. That said, getting a product into the market is not easy. The complex regulatory environment in China is still the greatest barrier to entry for foreign game companies."

Gamasutra - Nintendo Threatens Korean Pirates

Officials from Nintendo Korea have threatened legal action against anyone that copies, sells or distributes illegal game software in South Korea, with the release of a sternly worded statement aimed at discouraging the activity.

As translated by The Korea Herald, the statement reads: "'Nintendo will take strict legal action against businesses that are earning unfair profits by selling illegal copy machineries and downloading pirated programs.'"

Nintendo Korea has also threatened web site providers who allow illegal software to be accessed, while also threatening anyone who downloads the files with a police investigation.

Software piracy has long been a particular problem in Southeast Asia, while Nintendo has earned a reputation for vigorously defending its products from piracy – both in terms of copy protection and legal action. The statement is a first from Nintendo Korea though, previously one of Nintendo’s more neglected worldwide markets.

According to the Korea Herald, the success of the Nintendo DS has been catalyst for increased activity from game pirates targeting Nintendo products, with illegal copies of games for Nintendo, Sony and Microsoft formats apparently widely available in many electronics malls.

Squeezing Blood from a Stone

I'm not really sure what to make of this "turning over" that Nintendo has done for China, Hong Kong, Brazil, Mexico, and Paraquay. Brazil will likely thumb their nose at Nintendo, who isn't really marketing their stuff there anyway. If it's being pirated it's a market that Brazil has created on their own. They've also got some interesting ideas about IP law and what is fair protection. But anyway...

The fact that China cares is interesting, because it really indicates a desire on their part to play in the game.

Personally I think that if there was a little adjustment for how much games cost in these markets, so they weren't so out of whack for the average consumer you might see piracy drop. You can only really ask people to pay what they're able to.

Nintendo offers praise for US Government

Every year, the US Trade Representative solicits views from companies about piracy in foreign countries as part of the Special 301 process. This year Nintendo gave evidence about piracy in China, Hong Kong, Brazil, Mexico and Paraguay.

According to figures quoted by Nintendo, more than 7.7 million counterfeit videogame products have been seized from over 300 Chinese factories and retailers during the last ten years.
...
"Numerous factories, where tens of thousands of counterfeit Nintendo products were seized, escaped with only trivial fines or no penalty at all. And often these production sites continue to operate after products are seized," the statement continued.

"We're pleased the US government is pushing China to comply with its trade commitments in an effort to protect the lifeblood of the copyright and trademark industries."

China slams US piracy complaint

"By doing so, the US has ignored the Chinese government's immense efforts and great achievements in strengthening intellectual property rights protection and tightening enforcement of its copyright laws," the commissioner added.

On Monday, the US trade representative Susan Schwab said that piracy and counterfeiting levels in China remained unacceptably high.

The US said that despite China's promises to crackdown on fake software, DVDs, luxury goods, car parts and shoes, many of the goods were still widely available throughout the country.

China is one of the world's largest producers of counterfeit products, ranging from designer clothes, to pirated films and music, to luggage.

Many of the goods find their way into Europe and are knowingly bought as fakes by shoppers at markets and from street vendors. Firms claim that the poor quality copies dent their brand and divert profits and potenital clients.

Growth of the Global Video Game Market

It is impressive that 50% of EA's revenue came from outside of the US. I would be interested in similar numbers from Blizzard, unfortunately because they are sitting inside of Vivendi (who seems to be coasting on the success of World of Warcraft) we can't actually see these numbers. The fact that EA is opening pursuing new markets is a strategic move that will have long lasting effects. Their operations in China are surely a long term strategy.

"50% of '06 revenue outside North America" - EA // GamesIndustry.biz

"This year, more than 50 per cent of our revenue is coming from outside North America," said Tascan. "Exporting to 'outside' is very, very important, and a big part of your business."

He illustrated the point by pointing towards explosive network technology usage in China, where more than 260 million internet users now exist, and claimed Scandinavia will be among one of the global development hotspots in the next 10 years.

"We're very actively looking for partners in Scandinavia," he said. "We believe the quality of the entertainment here is incredible."