Will Microsoft Corporation (MSFT) Annihilate Sony Corp (ADR)(SNE) in Chinese Gaming Console Market?

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Microsoft Corporation (NASDAQ:MSFT) will launch its gaming console, XBOX One in China today, the first major gaming consoles company to do so after China lifted its ban on the device after 14 years, Its arch nemesis in the gaming industry Sony Corp (ADR)(NYSE:SNE) is yet to put a date on when it will be launching its gaming consoles in China. Naveen Menon, Asia-Pacific Partner at A.T. Kearney was recently on Bloomberg to discuss about Microsoft Corporation (NASDAQ:MSFT)’s entry in China with its gaming consoles and will it prove to be disadvantageous for Sony Corp (ADR) (NYSE:SNE).

“Well, Microsoft has clearly got a head start in terms of having a first mover advantage. We know that from history that having a first mover advantage in the console gaming segment is an advantage that can be maintained if the titles and the games are attractive enough to lure gamers and that’s going to be the big question isn’t it? In terms of the title that get approved for usage in the Chinese market and only time will tell, but we do think Microsoft Corporation (NASDAQ:MSFT) has a headstart,” Menon said.

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According to Menon, if console makers like Microsoft Corporation (NASDAQ:MSFT) and Sony Corp (ADR) (NYSE:SNE) have to make their mark in a country like China, where people have become used to playing games for free on their phones, tablets and PCs, they will need to subsidize their products significantly. He mentioned that even though Microsoft Corporation (NASDAQ:MSFT) is launching its console at a higher price in China, than what it retails for in the US, the games are expected to be priced in the lower range due to piracy concerns. He feels that unlike Microsoft Corporation (NASDAQ:MSFT), Sony Corp (ADR) (NYSE:SNE) will adopt a different pricing strategy and make its consoles more affordable to the Chinese consumers.

As of June 30, 2014, Jeffrey Ubben‘s ValueAct Capital owns over 74 million shares in Microsoft Corporation (NASDAQ:MSFT) and Mario Gabelli‘s Gamco Investors owns over 3 million shares in Sony Corp (ADR) (NYSE:SNE).


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