certainly not in near future, as we all know Chinese would have bought consoles in the black market anyway, the only game changing would be localized versions of the games. But that would be hard which one the chinese gamers would like. I would say, the standards - Fifa to have a chinese localization voice over and add the biggest chinese football players besides 'Messi/Ronaldo' or whoever is Fifa's main cover player is.

There would still be market for the consoles but I would say the M rated games might not be part of it and China would still ban/control its own game rating system.

edit: to add, they won't be like Europe or US having a ton of gamers buying $60 from day one.  most would be middle class buying the game that is out maybe 6 months after its main release and lower pricing.

China had grey market to import PS3/360 and Wii. In fact there was imports of between 1 to 2 million consoles per year from outside the country. So don't think that China never had consoles before. The PS2 for example was a huge seller in China and solidified Sony as the console manufacturer as choice. 

The market is there for video console gaming but it's very small. 

500k is a weird number. I've never seen this before. It seems fake. 

You know they can import games right? It's what the majority of core gamers do in China. Plus there are plans to localise additional games for Mainland. But in the meantime they just import Hong Kong version. 

Not really, not at all. And what do you mean by "even" in gaming?

http://www.newzoo.com/free/rankings/top-100-countries-by-game-revenues/

I was wrong china is even bigger than india 

On the short term it won't do much. Consoles are expensive and the most popular games are not on console anyway (mmorpg, moba, rts, browser games)

However if it does get big, game development might follow the movie industry in tailoring to the Chinese market, for example http://www.reuters.com/investigates/special-report/china-film/ "How Sony sanitized the new Adam Sandler movie to please Chinese censors"

And we might see more free to play games on consoles. Will this be the future of gaming:
http://www.techtimes.com/articles/26074/20150112/chinas-call-of-duty-online-is-now-live.htm

China already has the largest game company, Tencent. Will they start publishing console games, maybe even launch their own console, or stick to subscriptions and micro transactions from PC and mobile. They've already released their own OS for smart watches to maybe VR in the future.

I'm pretty sure taht list includes mobile games and MMo's. These aren't big in India, well mobile games are in terms of player base but not in terms of revenue. In terms of actual retail games on PC's and consoles, I'm sure India is bigger. Console have existed here for a long time and PC gaming is mainstream.

Also, your initial statement meant India's market was small in other sectors as well. Well, you're damn wrong there. India is the world's third-largest smartphone market only behind China and US.

http://gadgets.ndtv.com/mobiles/news/india-is-now-the-worlds-third-largest-smartphone-market-report-402182

Its also among the largest consumer electronics markets in the world.

http://www.marketwatch.com/story/global-consumer-electronics-market-outlook-2015-2014-05-15

I won't go into many more stuff which I know I'm missing, but here, I just wanted to give you some idea of India's importance as a market for electronic devices.

Immediately? Nothing.

I'm sure people would love that magical "1% of China" to come to life though.

I'm also sure Sony, MS, Ninty salivate at the thought of reaching 10-20% of the Chinese population (as they do in NA, JP, EU, etc). I'm sure they salivate at reaching that percentage in India, Indonesia, Nigeria, Brazil, etc as well, but I don't think it'll happen anytime soon though.

it doesnt mean shhhhmuch...