China saw video game revenues grow by more than a third in 2012 to nearly £8.5 billion last year, but console makers are likely to face an uphill battle for market share in a country where a whole generation has grown up without a PlayStation, Xbox or Wii and where free PC and mobile games dominate.
The absence of consoles has left PC games with almost two-thirds of the market, according to data released at the annual China games industry conference last month. Browser gaming accounted for just over 15% and mobile gaming was nearly 14%, the data also showed.
Roger Sheng, research director at technology research firm Gartner, said: "If Sony and Microsoft want to expand in China they need to think of changing their business model, and study the success of internet gaming market providers where games are free but they charge money from operating games."
China banned games consoles in 2000, citing their adverse effect on the mental health of its youth.
The suspension of the ban permits "foreign-invested enterprises" to make games consoles within Shanghai's free trade zone and sell them in China after inspection by the government.