July 13, 2011

Will Lenovo iSec Lift China's Ban on Gaming Console? (Guest Post)

By Stan Abrams

It’s been a while since I checked in on Lenovo’s console system, which for a brief period was being referred to as the “eBox.” Someone apparently told the right folks at Lenovo, and its games subsidiary Eedoo Technology, that the name wasn’t going to fly, and they’ve since switched over to “iSec.”

It avoids the “XBox” trademark infringement claims, but anything in the electronic/Internet/software industries that has a lowercase i in front of it is a really lame moniker, at least in my book.

The more important issue surrounding the impending release of the iSec, which might happen as early as this Fall, involves China’s decade-long ban on console gaming. Officially, the 2000 ban, for which we can thank the Ministry of Culture (MOC), was instigated by Tiger parents who were worried that their kids would play too many games and become fat, drooling zombies.

Seems like the ban didn’t work out all that well. Not only are consoles easy to get a hold of (Xbox and Wii are easy to pirate, and are therefore most popular), but the ban facilitated the incredibly fast rise of China’s online games industry, often faulted for Internet Addiction, the scourge of today’s obese, salivating, shambling undead youth. The Japanese and American game console firms were shut out of the market, but the Chinese online game operators (foreigners are restricted from running online games here) have done huge business. Funny how that worked out.

But the ban is still on the books, lack of enforcement notwithstanding.  What does that mean for Lenovo and the iSec?

Apparently they’re not sweating it all that much and have been in talks with the Ministry of Industry and Information Technology (MIIT) about the product launch. By the way, as is par for the course with China’s IT sector, we have the MOC and MIIT once again engaging in a turf war.

So why is MIIT willing to play ball with Lenovo? Two answers. First, Lenovo is arguing that their console, the iSec, is not really a game console at all, but a home entertainment center, one function of which is to play games.

No really, I’m not making this up. It was in a Reuters article and has been reported by others for a while now.

What sort of entertainment functions separate the iSec from your average game console? Would you believe playing music, browsing the Web and showing photos?

Stop laughing, this is serious. But yes, it is rather hilarious. You know, my microwave has a digital clock built in, but that doesn’t make it a time piece. In other words, photos and music and such are the things they cram into an electronic device these days as an afterthought, kind of like what cameras were to mobile devices a couple years ago before video chat really kicked in and they became must-have equipment.

Now, those of you with consoles are laughing really hard right now. You’re doing that because you know that consoles have been able to play music, show photos and browse the Web for a while now, and really cool software like XBMC (for XBox) can turn your console into a great device for streaming video.

In other words, Lenovo and MIIT, are you kidding me?

The second possibility, of course, is that Lenovo, the poster child for China’s successful multinational corporations, is being given special treatment. I have no proof of this, but I think basic literacy is all one needs to come to that conclusion. Scratch that — you could probably get by with podcasts in a pinch.

If Lenovo indeed gets the green light for iSec, then the ridiculous, decade old console ban that was all about protecting kids from brain rot, will be morphed into a very transparent protectionist rule (if it isn’t already).

I’m really excited to see how this one ends. The logical way for the government to proceed of course is to lift the ban and open the market. The Sonys and Microsofts and Nintendoses won’t find China easy (there’s still a nagging piracy problem here), but at least they can move ahead with real business plans for their console products.

The illogical protectionist way? Side with Lenovo, somehow distinguish its product from the foreign consoles, and dare the Japanese and Americans to kick the issue up to the next level (e.g. WTO). Since the game companies have a lot more at stake in China than their games business (think Windows), that ain’t gonna happen. The result would be an insane regulatory environment, but hey, it wouldn’t be the first time something like that has happened.

About The Author - Stan Abrams is a Beijing-based IP/IT lawyer and law professor. Stan has an M.A. from Johns Hopkins in International Relations, a J.D. from Boston College Law School, and a B.A. from Pomona College.  He blogs at China Hearsay.  

Further Reading - The Rise and Rise of Apple: Time for a Split?

The views and opinions expressed herein are the author's own and do not necessarily reflect those of EconMatters.

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