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Can Minecraft Help Microsoft Corporation (MSFT) Gain Foothold in China?

Microsoft Corporation (MSFT) Minecraft China

Microsoft Corporation  teamed up with software publisher NetEase to sell its Minecraft game in China. The company also agreed to create a new version of Minecraft for the Chinese market.

Microsoft is looking to build a position in China’s video games industry, which is estimated to be worth $24.4 billion this year, reported Seeking Alpha. As we reported earlier, Microsoft Corporation (NASDAQ:MSFT) has been struggling to gain a market share in PC and mobile gaming obsessed China.

Microsoft Corporation (MSFT) Minecraft for Xbox China

Custom-Made Minecraft Coming To China

Under the terms of the agreement, Microsoft subsidiary Mojang will give a five-year exclusive license to NetEase to distribute the mobile and PC versions of Minecraft in China.

“With our deep understanding of the Chinese market and our ability to successfully launch world-renowned online and mobile games, we offer a strong platform for the introduction of Minecraft to China’s vast user base. We believe this cooperation could leverage the strengths of both Mojang and NetEase, as well as provide the world’s largest audience with a superior user experience,” stated William Ding, CEO and founder of NetEase.

Minecraft Changing Prices in Many Countries

Mojang is a games studio based in Stockholm, Sweden. It was acquired by Microsoft Corporation  in 2014 for $2.5 billion. Mojang charges a $26.95 for the PC version of Minecraft and sells the Xbox and PlayStation versions for $17 to $19.99.

Recently, Mojang announced that it is introducing new prices for Minecraft in different regions. The company is increasing the price for game in Australia, Canada, Denmark, Europe, Norway, New Zealand, Poland and Sweden. However, the prices will remain unchanged in the U.S. and U.K.

“Money, eh? When it’s in your pocket it seems constant in value, but when you start comparing it to coins in pockets around the world, it seems to be worth more or less than before. That’s currency in a nutshell. That’s economics. It’s very boring,” Mojang said in a statement.

This move is aimed at aligning with the United States Dollar, according to Mojang.

The new prices, which are taking effect May 23, Monday, only applies to Minecraft for PC and not the Console and Pocket Editions, the games studio said.

Gaming Market in China

China is the growing market for video games, especially mobile gaming. It is expected that mobile gaming, which generated $25 billion in worldwide revenues last year, will surpass console and PC revenues in 2016. Mobile games generated $7 billion during 2015 in China.

“Consoles are very niche in China and aren’t even a $250 million business yet in the country with the PS4 & XB1 only having a tiny install base of 500,000 in the country. Consoles are set to remain a niche in China as users are simply not used to paying upfront for gaming hardware, when there are Internet cafes across China and subsidized phone contracts, nor are they used to paying for games software upfront when most PC and Mobile games are free to play. These reasons help explain why Consoles aren’t big in China and why Sony and Microsoft haven’t had huge successes yet,” according to a blog post by ZhugeEX.

In the related news, Microsoft and Sony Corp (ADR) are likely to release new hardware upgrades for PlayStation 4 and Xbox One “to keep up with industry changes”.

Shares of Microsoft Corporation  are down 0.84% in the morning session. Investors seem to be unhappy with the company’s performance, as the stock has lost 10.85% year-to-date.

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