Super Mario Party was launched in China on May 11, becoming only the fifth Nintendo first-party game officially released in the country. China has a strict game approval system, especially for imported games. A months-long review process is required, and the volume is tightly controlled. In 2020, only 98 imported titles were approved, 16 of which were on Switch.

Even though physical Switch games are not region-locked, some features are still restricted in China, including online gaming on international servers and access to downloadable content. Nintendo has the strongest possible local partner to drive its Switch business in Tencent, but sales of the official console are still constrained by the limitations mentioned above.

Following its release in December 2019, the Chinese version of the Switch achieved 1m shipments in slightly over a year, a small share compared to the global cumulative sell-in of 80m units achieved by the end of 2020. But one thing should be noted: China is the largest grey market for consoles globally. Consumers have relatively easy access to illegally imported consoles and games, which are not counted in the local sales numbers, and that can be several times larger than the official market.

A heavy accent on social and family gaming in the home

Due to the market's characteristics, Tencent's Switch console was destined to have a more focused entry strategy compared to the launch in Western markets. At the time of Tencent's Switch release, many Chinese Nintendo enthusiasts had already obtained consoles and games from the grey market. Although the China-only version has advantages in pricing (10-15% cheaper than imported ones) and after-sales services (with a 1-year warranty), the limited content has been a big factor preventing gamers from buying the official console.

As a result, Tencent positioned the official Chinese Switch more as a console for family and social gaming, by actively promoting its sports, party and multiplayer features and content for casual gamers and even non-gamers. The featured games mostly fall under this category, such as New Super Mario Bros. U Deluxe, Mario Odyssey, Mario Kart Deluxe, RingFit Adventure, Mario Tennis and Super Mario Party, plus Ubisoft's Just Dance.

Games that focus more on single-player gaming, such as The Legend of Zelda: Breath of the Wild, Pokémon: Let's Go, Pikachu/Eevee, have been on Tencent's planned line-up since launch, but there's never been an update on likely availability, while more enthusiast titles such as the Monster Hunter series, Fire Emblem series and Xenoblade Chronicles have no release plans at all at present. Animal Crossing has a reduced chance to be officially introduced in China because of the political turmoil where the game was involved in anti-government demonstrations.

Two reasons for Tencent's content strategy on Switch

The China Switch content strategy is partly due to the approval process: Tencent and Nintendo have to prioritise games that are more likely to be approved in the review process. The chosen games are also more suitable for family users, casual gamers and for gifting. These factors go hand-in-hand.

Even with the launch of PlayStation 5 and Xbox series X|S in China in 2021 (and the potential release of an upgraded Switch in the near future), the restrictions on console game approvals show no signs of easing any time soon. Considering that China has experienced a decade-long ban on console games because of government and public concerns about the physical and mental "harm" to the younger generation, what Tencent has achieved already can perhaps be considered ahead of expectations.

Tencent's distribution strategy for the Switch console also reflects the different positioning. Tencent focused on building a distribution channel that is based on physical stores, in addition to the dominant ecommerce sites in China. It said in its financial report that it has 904 authorised physical stores in 136 cities in the country as of Dec 2020. This allows the console to reach people who are not familiar with online shopping and provides hands-on experience to those who might be less interested in console gaming.

The Switch offer in China is unique due to Tencent's service integration

Tencent has been adding its services to the Switch console, aiming to integrate the console into its ecosystem. The console supports logging in with a WeChat account and purchasing online content with WeChat Pay. Workout data in RingFit Adventure can be shared via WeChat, allowing users to compare the results with friends. Content-wise, a collection of indie games by Chinese developers has been published on Switch, which are mostly backed by Tencent and its WeGame storefront. Just Dance has also added exclusive music content that appeals to Chinese gamers.

In the future, we expect the Switch platform to become more integrated into Tencent's products. This might include more of Tencent's games coming to the platform, possible WeGame storefront integration and support for more social media apps. This continued integration inevitably means that Switch is positioned differently in mainland China than other markets. Tencent will continue to pour resources into the domestic console market as it gives it a foothold in a new part of the games sector for the company.

Table: Switch games that have been approved for sale in China (as of Jun 2021)