Sony's disc-free PlayStation strategy could reshape China's console market

On July 1, 2026, Sony Interactive Entertainment announced it would discontinue producing physical discs for PlayStation games. While this news was met with skepticism worldwide, its consequences are particularly profound in China, a market where Japanese console manufacturers hold a unique position despite the country's modest console market share.

Although the Chinese gaming market is primarily driven by PC-based and mobile platforms, accounting for 11% of the market, a significant minority of console enthusiasts rely on physical media for game preservation, accessibility, and compliance with strict domestic regulations. The decision could potentially undermine one of Sony's key competitive advantages in the region.

China's video game market has faced numerous hurdles, including intellectual property disputes, government-imposed gaming bans, and a console ban from 2000 to 2015. The latter's lingering effects are still evident today, with Japanese companies like Sony and Nintendo having limited console game offerings compared to PC and mobile games.

However, recent years have witnessed a shift in cultural perceptions, with the Nintendo Switch's successful launch in 2019 and the approval of culturally significant titles like Black Myth: Wukong. This transformation has opened doors for Japanese console manufacturers to expand their presence beyond the domestic market. The importance of physical video games in China cannot be overstated.

The government's rigorous approval process for video games, particularly for Western-based ones, has long driven the thriving gray market for physical games. Huaqiangbei and Xianyu/Taobao platforms provide gamers with timely access to titles, bypassing censorship restrictions. By eliminating physical discs, Sony inadvertently eliminates a crucial avenue for Chinese gamers to access internationally acclaimed titles that may not have received official regulatory approval.

The removal of physical discs also impacts the economic aspect of gaming in China. Global game releases typically cost around $70 USD (approximately ¥500 RMB), while approved Chinese releases are substantially cheaper, often ranging from 30% to 55% lower. Physical media also facilitates a robust secondhand market, enabling gamers to recoup a portion of their initial investment by reselling their games.

By eliminating physical media, Sony hinders this resale mechanism, pricing out budget-conscious and middle-class gamers from accessing the console ecosystem. Furthermore, the emergence of Chinese-origin collectibles, currently valued at $142 billion, presents significant economic opportunities, with console-driven launches accounting for 26% of this market.

Collectibles have even expanded to include "vintage" games, experiencing surges in popularity in recent times. Local developers, such as AstroLabe Games, have echoed the market's sentiment, reaffirming their commitment to offering physical discs for upcoming game titles. This decision underscores the market's insistence that discontinuing physical media alienates a dedicated and devoted gaming audience.

In conclusion, as the gaming market in China remains substantial and influential, the removal of physical discs could have far-reaching consequences for the industry, impacting cultural and economic aspects alike.