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Gamers visit Sony’s PlayStation booth at the annual China Joy gaming conference in Shanghai on July 30, 2021.
Arjun Kharpal | CNBC

GUANGZHOU, China — For 14 years, gaming consoles from the likes of Sony, Microsoft and Nintendo were banned in China.

The ban was finally lifted in 2014.

While these consoles were available on the so-called “grey market” — places that would sell imported devices for a high price — the prohibition led to the surge in popularity of PC and mobile games.

Chinese developers, like giants Tencent and NetEase, poured their efforts into making hit titles for those platforms during the more than a decade-long ban.

Now things are changing. China’s tech giants, alongside a new breed of gaming developers, are looking to tap the growth of videogame consoles in China and target players overseas who have grown up with those devices.

For the global market, the console is huge — roughly like 30% revenue. But in China, it’s only 1% and so there’s a huge potential opportunity for the console game developer inside China.
Daniel Ahmad
senior analyst, Niko Partners

Sony, Microsoft and Nintendo have all launched their next-generation gaming consoles in China.

“For the global market, the console is huge — roughly like 30% revenue. But in China, it’s only 1% and so there’s a huge potential opportunity for the console game developer inside China,” Frank Mingbo Li, the founder of Studio Surgical Scalpels, a Tencent-backed game studio, told CNBC.

Studio Surgical Scalpels is making an outer-space based “first-person shooter” game called “Boundary” for PC and Sony’s PlayStation 4 and PlayStation 5.

China’s games console hardware and software market hit $1.84 billion in 2020 and is expected to reach $2.46 billion in 2025, according to market intelligence firm Niko Partners. But that’s eclipsed by both mobile and PC game revenue. Mobile game revenue alone stood at $29.2 billion in 2020.

Globally, the console market is expected to rake in revenue of $49.2 billion, accounting for 28% of the worldwide games market, according to market research firm Newzoo.

That’s where the opportunity lies.

“Despite consoles being banned between 2000 and 2014, we are seeing high demand for consoles in China, and there is an even larger market for console outside the country,” Daniel Ahmad, senior analyst at Niko Partners, told CNBC.

Li, who is a gaming industry veteran, said “Boundary” was designed from the “very first day” for the global market, underscoring the Chinese developer’s ambitions.

“Boundary” is just one of several high-profile console games coming out of China. Another upcoming game is “Black Myth: Wu Kong” which is being developed by Chinese studio Game Science.

Gaming giants eye console market

The world’s largest gaming company, Tencent, along with rival Chinese firm NetEase, are also eyeing the console market.

NetEase launched a high-profile game on Thursday called “Naraka: Bladepoint” — a 60-person battle royale style game like popular title “Fortnite.” The Hangzhou, China-based company is also developing the game for consoles but hasn’t revealed a release date yet.

In 2019, NetEase opened a gaming outfit in Montreal, Canada, to help with international expansion and another studio in Japan dedicated to console game production last year.

In an interview with CNBC this month, Hu Zhipeng, vice president at NetEase, called the console market “pretty attractive.”

“Our Sakura Studio in Japan and in Montreal are dedicated to developing games on consoles, as one third of overseas market shares is taken by console games,” Hu said.

Tencent’s growth in gaming over the years has been driven a lot by acquisitions of or investments into game studios. That has been focused heavily on mobile but is now shifting to companies making games for PC and console.

“Nearly half of the 51 investments in 2021 are in companies with experience developing PC and console games. Many of these are domestic,” according to a Niko Partners report published in May.

Until 2020, most of Tencent’s domestic investments went into mobile gaming while PC and console investments were done overseas, the report noted.

And Tencent-owned developer TiMi Studio has opened offices in Montreal and Seattle to focus on PC and console games.

“Chinese studios are looking to match their overseas peers in game development by standardizing tools, creating advanced production processes, and investing in large teams to ensure they can create large scale AAA quality titles that provide a competitive edge, meet evolving player demands, and reach a broad audience both in terms of geographies and platforms,” Ahmad from Niko Partners said.

AAA is an unofficial term to denote high-quality and popular games.

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Drone startup Zipline hits 1 million deliveries, looks to restaurants as it continues to grow

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Drone startup Zipline hits 1 million deliveries, looks to restaurants as it continues to grow

Autonomous delivery drone startup Zipline said Friday that it hit its 1 millionth delivery to customers and that it’s eyeing restaurant partnerships in its next phase of growth.

The San Francisco-based startup designs, builds and operates autonomous delivery drones, working with clients that range from more than 4,700 hospitals, including the Cleveland Clinic, to major brands such as Walmart and GNC. It’s raised more than $500 million so far from investors including Sequoia Capital, a16z and Google Ventures. Zipline is also a CNBC Disruptor 50 company.

The company said its zero-emission drones have now flown more than 70 million autonomous commercial miles across four continents and delivered more than 10 million products.

The milestone 1 millionth delivery carried two bags of IV fluid from a Zipline distribution center in Ghana to a local health facility.

As the company continues to expand, it will bring on Panera Bread in Seattle, Memorial Hermann Health System in Houston, and Jet’s Pizza in Detroit.

Zipline CEO Keller Rinaudo Cliffton told CNBC that 70% of the company’s deliveries have happened in the past two years and, in the future, the goal is to do 1 million deliveries a day.

“The three areas where the incentive really makes the most sense today are health care, quick commerce and food, and those are the three main markets that we focus on,” Rinaudo Cliffton said. “Our goal is to work with really the best brands or the best institutions in each of those markets.”

The push into restaurant partnerships marks an “obvious transition” he said, due to the continuing growth in interest in instant food delivery. Zipline already delivers food from Walmart to customers.

“We need to start using vehicles that are light, fast, autonomous and zero-emission,” Rinaudo Cliffton said. “Delivering in this way is 10 times as fast, it’s less expensive … and relative to the traditional delivery apps that most restaurants will be working with, we triple the service radius, which means you actually [get] 10 times the number of customers who are reachable via instant delivery.”

Zipline deliveries for some Panera locations in Seattle are expected to begin next year, the Panera franchisee’s Chief Operating Officer Ron Bellamy told CNBC. Delivery continues to grow for its business, even in an inflationary environment, he said. Costs with Zipline are anticipated to be on par with what third-party delivery is now, he added, with the hope of that cost lowering over time. 

“I’m encouraged about it, not just even in terms of what I can do for the business, but as a consumer, I think at the end of the day, if it is economical, and it delivers a better overall experience, then the consumer will speak,” Bellamy said.

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Super Micro plunges as investors rotate out of red-hot AI stock ahead of earnings later this month

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Super Micro plunges as investors rotate out of red-hot AI stock ahead of earnings later this month

David Paul Morris | Bloomberg | Getty Images

Super Micro Computer shares plunged 18% on Friday as investors scaled back their holdings of one of the market’s hottest stocks ahead of earnings later this month.

Shares of Super Micro, which joined the S&P 500 in March, are still up about 168% this year after climbing 246% in 2023. The server and computer infrastructure company is a primary vendor for Nvidia, whose technology is the backbone for most of today’s powerful artificial intelligence models.

Super Micro said in a brief press release on Friday that it will report fiscal third-quarter results on April 30. The company broke from its pattern of providing preliminary results. In January, Super Micro increased its sales and earnings guidance 11 days before announcing second-quarter financials.

The stock is on pace for its steepest drop since Feb. 16, when it fell about 20%.

While Super Micro is getting a big boost from its ties to Nvidia, the market remains highly contested, with competitors including Dell and Hewlett Packard Enterprise planning to build systems using Nvidia’s latest generation of Blackwell graphics processing units.

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Dutch government says it may stop using Facebook over privacy concerns

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Dutch government says it may stop using Facebook over privacy concerns

Morning traffic outside Meta headquarters, in Mountain View, California, U.S. November 9, 2022.

Peter Dasilva | Reuters

The Dutch government said Friday that it may be forced to stop using Facebook after a warning from the Netherlands’ privacy regulator about the Meta-owned social media platform’s privacy risks.

The Dutch Data Protection Authority (DPA) issued a statement advising the Dutch Interior Ministry not to rely on Facebook pages to communicate with citizens if it doesn’t have a clear idea of how Facebook uses the personal data of people who visit government pages.

The Interior Ministry had previously asked the DPA to advise on whether the government could use Facebook pages in a compliant way.

The government wants clarity from Meta “as soon as possible, at the latest before the summer recess, on how they are addressing our concerns,” Alexandra van Huffelen, the Dutch Minister for Digitalization, said in a statement.

“Otherwise, in line with the advice of the DPA, we will be forced to stop our activities on Facebook pages,” she added.

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The Dutch DPA’s chairman, Aleid Wolfsen, said in a statement that “people who visit a government page trust that their personal and sensitive information is in safe hands.”

“The fact that this can also involve information about children and young people makes this even more important. They are vulnerable online and need extra protection,” Wolfsen said in the statement, which was translated to English via Google Translate.

A Meta spokesperson told CNBC: “We fundamentally disagree with the assessment that underpins this advice, which is wrong on the facts and demonstrates a fundamental misunderstanding as to how our products work.”

“We review all Meta products to ensure they comply with laws in the regions in which we offer our services, and will continue to engage with the Government to ensure they can use social media to communicate with people,” the Meta spokesperson added.

The DPA advice serves as further evidence of “growing distrust between European regulators and Meta,” Matthew Holman, a tech, privacy, and AI partner at law firm Cripps, told CNBC via email.

Holman said that the Dutch regulator’s concern is likely to be that user data “is shared with government departments on Meta’s platform and could still be subject to security issues, monitoring or access by US federal agencies.”

– CNBC’s April Roach contributed to this report

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