In context: Nintendo's Switch appears to be outselling its rivals to become the most popular gaming console in China, owing to a strong partnership with Tencent. The PlayStation 5 and Xbox Series X are unlikely to change that trend as they're not available through official retail channels and still come with restrictions on what games can be played on them. For years, China had foreign video game consoles banned, which in turn made smartphone gaming extremely popular.
In April 2019, Nintendo saw an opportunity to partner up with Tencent on launching the Switch console in China, and by December it brought it into the world's biggest and fastest-growing gaming market. The two companies also enlisted the help of several local AAA game developers including Tencent's own Next Studio to add to the catalog.
One year in, the Switch console has set a foothold in a region where Microsoft's Xbox and Sony's PlayStation consoles have fought hard for years to reach more consumers. Faced with region locks and a lot of other limitations, the majority of Chinese gamers tend to buy imports of these consoles that offer access to an expanded library of games that would normally not be approved by the Chinese authorities.
According to a report from market tracking firm Niko Partners, the Nintendo Switch sold more than 1.3 million units this year, which includes sales made through gray market channels. That's close to double the sales of the Xbox One and PlayStation 4 during the same period. If we factor in gray market sales, the Switch sold 3.95 million units in China since its launch in 2017, versus 3.52 million PlayStation 4 units and 1.24 million Xbox One units.
As of writing, Switch gamers in China still have no access to staple games like The Legend of Zelda: Breath of the Wild and Animal Crossing: New Horizons, which have yet to receive government approval due to concerns that they may cause youth game addiction.
That still hasn't stopped gamers from obtaining gray market copies of the games, particularly Animal Crossing: New Horizons, which has spawned a mini-market of its own.
Analyst Daniel Ahmad from Niko Partners says the console games market in China is expected to grow to $2.15 billion by 2024, but that is a conservative estimate given that Tencent considers its partnership with Nintendo a rewarding endeavor. The Chinese giant is the world's largest gaming company by revenue, and has the resources to populate the Chinese Switch store with more games in the coming years.