I'm from mainland China, so maybe I can shed some 'light' about the markets here. :p
1. Hardware
PC and online game markets held a great share in the market, larger (in percentage) than any other regions in the world. Most player only knows about PC and online games, and out of ignorance and loss of touch with the outside world, many of them still holds the opinion that console games are too 'kiddy' for their taste, and it will certainly be devoured by PC gaming. Other PC players may purchase a 1000$US PC for their gaming experience, but they just don't realize that you can play most of those games, and many more console-exclusive games, on XBox 360 or PS2 or whatever else.
I myself belive that this phenomenon comes from the fact that video games in general is still not accepted by mainstream Chinese thoughts. So buying a gaming console is considered to be too 'immature' and 'no good for kids'. But buying a PC is different, because PC can do much more other things, and most important of all, children can use PC to study. Many Chinese parents take schoolwork and exam results to be more important than anything else.
The government also did nothing but detrimental actions to that. In 2000, there was a policy to ban all import of videogame-related parts. For example, if Sony wants to sell PS2 in China, it can't do it except in collaboration with a domestic company.
Of course, this deprecated thought is slightly changing over time. With the blooming of online games industry in China, the government has already taken it seriously, and they started to treat it as a 'real' industry to develop. But online games brought more social problems too, therefore the steps is still not qutie firm.
In the case of console markets... largely dominated by piracy and imports, domestic consoles are struggling in China. Only Saturn, PS2, N64, GBA/SP/M, NDS/NDSL has domestic versions in China, and the amount of them is so small that it is negligible compared to the large import market.
PSP sales are the largest of all, because of its portable-multimedia-device nature. Many people bought it just to look cool. They played few games on it, and spent most of their time watching MPEG-4 videos, listening to MP3s, etc. PS2 is still the mainstream gaming consoles. XBox 360 sales are rising steadily, although many persons, immersed with Japanese-style games (not necessarily made by Japanese) since childhood, refused to buy a 360 simply because there's too few JRPGs on that platform. NDSL sales are strong too. Those platform with little or no piracy (N64, GCN before 2005, PS3) has far fewer sales.
2. Software
Due to piracy, most legal version of games are sold relatively poorly. A PC game that sells 100k in China are considered a great success. In fact, offline games purely made by mainland Chinese studio are mostly disappeared. For now only offline PC games made in Taiwan and from abroad are sold, and the sales figures are mostly poor. Online games can have other means to get continuous profits, and that's the reason why online games are so hot in China.
On the other hand, domestic console games are mostly non-existant, although Nintendo has done something on it, establishing the iQue company in collaboration with a Chinese PhD, to sell consoles and games in China. Sony has tried too, and had started selling PS2s in China in 2003, but it was judged to be illegal (see above for reasons) so it's a failure for them.
Well, in fact, that's only the surface of the market. Hope I can write more later. :)
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