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of interest industry - Q&A: Behind Huawei’s TRON Game Console Project

China’s video game market is coming under the spotlight as the government has lifted its 13-year ban on sales of dedicated game consoles.

Tron video gaming device by Huawei
Huawei

Last week, Chinese telecommunications equipment supplier Huawei Technologies stole some of that spotlight by unveiling its first game console at the Consumer Electronics Show in Las Vegas.

Huawei’s TRON is the latest addition to the increasing number of home game consoles that run on Google’s Android, a category defined earlier by U.S. startup Ouya and others. The cylindrical-shaped TRON comes with Nvidia Corp.NVDA -2.35%’s Tegra 4 processor and connects with a controller via Bluetooth technology.

In an interview with The Wall Street Journal, David Yao, the TRON project manager at Huawei, talked about the new console and how the company views the future of gaming in China. While online games played on PCs, such as those provided by Chinese Internet giant Tencent HoldingsTCEHY -1.71%, are the mainstream in China, Huawei reckons that many Chinese families would play games in living rooms if they had inexpensive consoles. Edited excerpts:

WSJ: Why did Huawei develop TRON?

Yao: We came up with the concept of a game console at the end of 2012. We then created a development team with about 60 people working on hardware and software. Huawei has invested roughly 30 million yuan ($5 million) to develop the console, and that doesn’t include the additional investment on game software.

We think it’s a big opportunity. In China there are about 400 million people who play video games. Today, online PC games account for the majority of that population, but we believe that some of those people will move to the living room to play games on a larger, higher-definition screen with a better sound system. And there will also be a shift from single-player games to more family-oriented games.

WSJ: When will Huawei release the TRON and how much will it cost? Will it be available outside China?

Yao: The launch will be in the second quarter, but we don’t have an exact date yet. The initial market will be just China. We are still evaluating markets outside China, but we are not sure in which overseas market we may release it. The TRON’s target retail price in China will be below 1,000 yuan ($165).

WSJ: Will you have enough content providers for the TRON?

Yao: Including video content and game software developers, we are already working with more than 50 partners. At the launch in the second quarter, we expect to have more than 20 software titles available for the TRON. After we showcased the TRON at CES last week, more foreign game developers have contacted us to discuss partnerships.

WSJ: How was the TRON project affected by the Chinese government’s decision to lift its ban on game consoles?

Yao: Actually the Tron wouldn’t have been subject to the console ban. We could have sold it even before the ban was lifted, because the TRON is a multi-purpose home entertainment device for watching videos and listening to the music, and gaming is just one of its functions. The ban applied to consoles that were more dedicated to games.

Even so, now that the ban has been lifted, there is more attention on the game console market in China. And in our marketing, we are also emphasizing the gaming aspect of the TRON.

WSJ: If foreign game consoles enter the Chinese market after the ban, how will TRON compete?

Yao: Nintendo, Sony and Microsoft are all very professional companies that have been making dedicated consoles for years. But not all Chinese are rich enough to afford the consoles from those companies. Some families may not need the extreme gaming experiences offered by high-end consoles. With TRON, we are providing an affordable product with acceptable quality. We think the majority of Chinese families could be potential customers. Our market research findings show that there are three kinds of game players in China. The first kind is people who have been playing with dedicated consoles even though they were banned. They have found ways to get hold of those consoles from markets outside China, and they can afford the foreign consoles. The second type is the online game players who use their PCs. And the third kind is people who mainly play mobile games. We believe that people who play PC games and mobile games could be the main customers for the TRON.

WSJ: Huawei has branched outside telecom equipment to sell consumer products like smartphones. How does the TRON fit into your strategy?

Yao: Huawei has been trying to combine services with devices. And the TRON is a good way to integrate a device with cloud-based content. Being in the video game market will also help Huawei become a more recognized consumer brand in China.

http://blogs.wsj.com/digits/2014/01/14/qa-behind-huaweis-tron-game-console-project/