Many tech companies see China as a potential cash cow, but the looming threat of organized piracy has forced some companies to either hold off on launching new products, or avoid the market altogether.
The high-definition Blu-ray Disc format should find its way to China on a wider scale, but many Chinese consumers are still purchasing cheap pirated DVDs rather than investing in Blu-ray. Furthermore, Sony's first Blu-ray launch didn't rack up solid sales numbers, even though not much was expected.
The China Blue High-Definition (CBHD) format, aimed at competing with Blu-ray Disc, launched last week with lower prices than compareable Blu-ray products. CBHD movie players can be purchased for under $300 USD, while HD movies start at $8 each. Both of these pricing points are significantly lower than Blu-ray products in China.
It's unlikely CBHD will expand outside of China, but with 72 million consumers in the country expected to purchase HDTVs by 2011, the format could still seriously cash in.
I'm very interested to see how the BDA will handle both piracy and the CBHD format, as more consumers will be interested in using a cheaper domestic product -- even with lower quality -- than purchasing the pricier Japanese technology.
The Chinese piracy market is huge, and it's very likely CBHD will also have to deal with pirated content. It's normally software companies that are weary of launching their products in a market saturated with pirated software, but some hardware manufacturers also avoid the Chinese market due to cheap knockoffs.
If these HD movies truly are available for as little as $8 each, then perhaps it's the right formula to handle piracy. In addition, expect these CBHD players to include some type of streaming format in the future, which could help convince consumers to buy and stream content.
Along with dealing with movie piracy, the CBHD format may also have to deal with cheap knockoff players. Pirated Apple iPhones, MacBooks, and other knockoffs are extremely popular in Chinese marketplaces. Apple is expected to finally launch its iPhone in China sometime late this year, or early next year, if it actually makes it to China. The high availability of pirated phones may force Apple to avoid the market in favor of promoting it in other parts of the world.
