China Telecom signs Xbox deal with MS

Dylan Bushell-Embling
28 Jul 2014
00:00

China Telecom's Xbox One partnership with Microsoft could help the operator differentiate itself, and even act as a springboard to a wider digital home offering, according to analysts.

China Telecom revealed last week that it has entered an exclusive partnership with Microsoft regarding sales of the latter's new Xbox One games console.

The deal will see China Telecom marketing the console to its 30 million subscribers - potentially as part of service bundles - from September. The console will also be available through retail channels.

Analysys Mason senior analyst Cesar Bachelet said the partnership will help China Telecom stand out while capitalizing on the latest demand for games consoles.

“The Xbox One could also be the cornerstone for a multimedia digital home proposition, combining China Telecom’s connectivity with games, music and video,” Bachelet said.

“It is... not inconceivable for China Telecom to use the Xbox One as a multimedia set-top box to target some segments of its subscriber base. The operator could also potentially use the Xbox One as an entry point to target consumers outside of its coverage area through an ‘over-the-top’ video service.”

But he added that take-up of the console in China will be constrained by the limited number of people who can afford the premium price tag.

“Even if China Telecom spreads the cost of the console by offering it as part of a subscription-based bundle with its services, the price is still likely to be too high for a significant percentage of the population,” he said.

“We can also expect a reaction from well-established providers of online gaming services such as Tencent. Tencent in particular, is in a good position to offer less expensive, yet high quality, alternatives by capitalizing on its well-established relationship with games studios.”

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