Microsoft eyes China's gaming market with new joint venture

The joint venture will be set up in a new free trade zone in Shanghai

Xboxes and Playstations sold in China's gray market.

Xboxes and Playstations sold in China's gray market.

Microsoft is entering China's gaming market with a new joint venture, the latest sign that its Xbox console soon arrive in the country.

Microsoft established the joint venture with BesTV, a local provider of Internet television services, according to a stock exchange filing the Chinese company made on Tuesday. The venture's core business will focus on "a new generation of family gaming entertainment technology, devices, content, and services."

No mention of the Xbox name was made in the stock exchange filing. But the venture's business scope also includes game development and operating third-party games and entertainment software. In addition, the venture will push a "one cloud multiple screens" technology.

BesTV, a subsidiary of Shanghai Media Group, will have a controlling stake in the venture at 51 percent, while Microsoft holds the remainder. The total investment will reach US$237 million.

Microsoft declined to say what role, if any, its Xbox product would have in the joint venture. But in an email, the company said the deal was made "to explore new opportunities in Shanghai and China."

"We believe there is great market potential and partnership opportunities here and look forward to sharing more details soon," the company said. "This is the first step of many to come for Microsoft and BesTV."

Earlier this year, Microsoft unveiled its upcoming Xbox One console, a product meant to be both a gaming and home entertainment device. It will launch in the U.S. in November.

Many gaming consoles, however, have long been banned in China, as part of government regulations meant to protect children. But despite the official ban, the products have still thrived in the country's gray market, where local merchants often import Xbox 360s and Sony PlayStation 3s bought in Japan.

Microsoft has spent years trying to gain China's permission to sell its gaming console directly in the country, a task that has involved getting approval from various regulators.

The company's joint venture, however, is being established in a new free trade zone located in Shanghai that is meant to attract more foreign investment. Exact regulations of the zone are still unclear, but it could offer more open policies on trade.

The free trade zone will launch on Sept. 29, according to the Chinese state press.

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