Despite the ban, game consoles were available for sale illegally in China through the grey market for many years. Between 2002-2009, an estimated
1.2 million units of consoles were sold illegally every year in the country. Although these sales have benefitted console makers they have been missing out on not only a higher volume of unit sales, but on additional revenue streams which bolster profits in other markets. Now that consoles are legal to own, the manufacturers will be able to make more money through advertising, promotions, marketing to foster sales of legally distributed games, which also offer the ability to connect to other consoles online. Once console sales ramp in sufficient numbers, AMD’s APUs and GPUs will ship in volumes far exceeding the millions of illegal consoles sold in the Chinese gray market.
In sum, the Chinese console market is an untapped opportunity, and its opening should significantly spur global game console sales in the future. If consoles gain popularity among Chinese gamers, and are able to capture even 10% of the gaming population in the country (that is, 10% of
500 million gamers), it will still be a significant jump from the current level. AMD will benefit from higher revenues from console sales without increasing its R&D or marketing costs.
