After months of waiting, Tencent and Nintendo confirmed that they would be officially launching Nintendo Switch in mainland China on 10 December, 2019 just in time for the major Double 12 shopping event but with only one official game title available, New Super Mario Bros U Deluxe.
Lack of official games makes this a bold move
The console will launch with a demo version of the title pre-loaded onto the device, but a full digital version of the game will cost RMB 299, or around $42. Both companies confirmed that two more Nintendo titles – Mario Kart 8 Deluxe and Super Mario Odyssey – would be arriving in the coming weeks, and likely in time for Chinese New Year at the end of January 2020, again priced at RMB 299. This pricing is less than grey market import games, so is likely to catch the eye of consumers that may have been thinking about buying an import Switch.
Launching into the market with one official game is a bold move, and perhaps it would have been wiser to wait a few weeks to add more approved games to the roster. However, both companies will be aware that the Chinese Switch can play grey market import software, and with a cross-section of top games not needing online gaming support, there are other bits of software that early adopters can dig into.
Tencent and Nintendo announced that there would be 10-20 official games released for the Switch by the end of 2020. First-party games going through localisation and being prepared for the market include Mario Tennis Aces, Super Mario Party, Kirby Star Allies, Yoshi's Crafted World, Pokémon Let's Go! Pikachu / Pokémon Let's Go! Eevee and The Legend of Zelda: Breath of The Wild. Tencent and Nintendo showed off a list of third-party developers and publishers supporting the Switch in China, which illustrated the broadening support the platform has in the market. Ubisoft also confirmed that its China-developed title Rabbids: Adventure Party would be a Chinese Switch exclusive.
Hardware pricing is in line with international markets; online pre-orders reach 50,000
There was no exact date of when the cheaper Nintendo Switch Lite would be introduced to the market although Tencent confirmed it was being prepared, but the flagship model will be priced at RMB 2,099 (around $300), putting it on a similar level to international pricing and the price of Switch consoles that have been imported from other Asian markets.
On announcing the launch, Tencent immediately kicked off pre-orders for the Switch through major online retailers JD.com and Tmall. As of 12 hours after the announcement, pre-orders via Tmall where a RMB 100 was required (~$14) were at 4,800 and via JD.com they stood at 45,000 with no upfront deposit.
IHS Markit Technology expects sell-through of around 100,000 units by the end of 2019, but quite a lot will depend on how much marketing is done by Tencent and the promotional activity around the Double 12 shopping event that happens every year on 12th December. For a detailed view of our forecast for official Switch console sales in mainland China please log in to the service.
Nintendo is right to be cautious about the impact of a China launch on global sales of the Switch
The official console market in mainland China is underdeveloped and only a small part of overall spending on games in the market, the vast majority of which takes place across mobile and PC games. This entrenched market dynamic will not change with the launch of the Switch and Nintendo is rightly cautious about the sales potential for its console in the world’s biggest games market.
Microsoft and Sony have both struggled to make an impact in a market where free-to-play content and smartphones are the growth engine behind the market, a indication of the challenge that Nintendo faces. Additionally, there is already a healthy grey market for Switch hardware and games in China, which undermines the sales potential of the official console even with some key advantages on offer: local online gaming infrastructure, localised content, and 12-month warranty.
Nintendo is arguably better positioned than both Microsoft and Sony
While sales forecast caution is advisable, it should also be acknowledged that Nintendo is arguably better positioned than either Microsoft or Sony as it enters the market. Nintendo IP is well recognized in China with franchises like Mario and Pokémon being very popular. While Microsoft and Sony have both struggled to push through some of their major games for approval for release in China, it is likely that Nintendo’s games will have an easier route through the system due to their content.
Other positive factors to take into consideration are the features and hybrid form factor of the Switch. We expect the handheld use case of the device and the upcoming launch of Switch Lite in the territory to appeal to a broader audience than traditional TV consoles.
Lastly, Nintendo’s joint venture with the world’s biggest game company Tencent is a key competitive advantage. The strength and diversity of Tencent’s capabilities in terms of cloud services, online gaming, game development, content distribution and user acquisition are unparalleled in the Chinese market.