Pricing Strategy for Microsoft Corporation (MSFT)’s Xbox in China

The Chinese government finally ended a 13-year old ban on gaming consoles paving way from Microsoft Corporation (NASDAQ:MSFT) to launch its first ever console in the country. Microsoft has already started taking orders from online retailer JD.Com Inc. (ADR) (NASDAQ:JD) via Tencent holdings, although the major concern at the moment is for how much the console will go up on sale.

Managing Partner at Niko Partners, Lisa Hanson, pointed out on CNBC that prices in China were extremely high during the ban period as the consoles had to pass through various channels, some of which that were not entirely legal resulting in exorbitant prices at the retail front.

“[…] The prices even while the consoles were banned’ were usually higher than you would find on the international market because they had to go through so many channels to get to the retail stores,” said Hanson.

People in China were used to paying high international prices to get gaming consoles, but were not used to paying high international prices on software’s for the consoles. Some of the speculative price tags that Hanson has seen on the consoles could be a bit higher than the normal prices that people were used to paying.

“Some of the speculative pricing that I have seen myself looks like it could be even two times as much as it is on the international markets. I would find that highly unlikely to come out that way,” said Hanson.

The pricing for the console has not been announced as of the moment, as people are only required to place pre-orders at a price of 499 RMB (around $81). Prices for the console are expected to be announced sometime before September, when the official launch will be made.

It is still unclear whether Microsoft Corporation (NASDAQ:MSFT) can be able to attract a good amount of market share, with the new Xbox in china taking into consideration that a good percentage of people in China have been used to games offered on their PC’s. Mobile gaming is another challenge that the company will have to battle if it is to get increased sales for the Xbox.

Disclosure: none