Microsoft Corp. (MSFT) has postponed the launch of its Xbox One game console in China to Sep 29. The launch was initially slated for Sep 23.

The government has approved 10 games, digital versions of which will also be available.

Why the Delay?

Microsoft stated that though it has made steady progress, it still needed some more time to deliver the best experience to its users. Besides this, no other reason was given for the delay. The company will compensate preorder customers with two free games.

Microsoft’s Experience in China So Far

The Chinese government ended the 14-year ban on sales of foreign games consoles, following which Microsoft entered into a joint venture with a Chinese partner, BesTV New Media, to develop video games.

The delay is the latest in a string of impediments for Microsoft in China. It is already under scrutiny for alleged anti-trust violations linked to the Windows operating system and Microsoft Office.

China offers a huge potential market for the Xbox. However, video game fans in China are likely to find the Xbox One too expensive. Particularly so because it costs about 50% more than the $400 starting price in the U.S.

Microsoft and the Xbox One

Microsoft launched the device more than a year back. It faced criticism from video game fans about limitations on reselling games and on requirements to connect the device to the Internet. Microsoft later loosened these policies.

As a result, Xbox One sales were not off to a great start. Microsoft was hard-pressed to attract buyers, which led to the dissociation of the Kinect motion-detecting sensor from the console, thus enabling a price cut of $100.

China’s Regulations

China is the world's third largest gaming market.

Console games must get approved by Shanghai's local culture department. This is meant to ensure that they do not hurt China's national unity, territorial veracity or status - or promote racial hatred, obscenity, betting, hostility or drugs.

Microsoft currently has a Zacks Rank #3 (Hold). Better-ranked stocks in this industry are Aspen Tech Inc. (AZPN), Park City Group Inc. (PCYG) and PTC Inc. (PTC), all of which sport a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on MSFT
Read the Full Research Report on AZPN
Read the Full Research Report on PCYG
Read the Full Research Report on PTC


Zacks Investment Research