The news comes courtesy of a stock exchange filing today from Shanghai Oriental Pearl Group. Here’s the details from the filing. Sony and Shanghai Oriental Pearl Group will establish two joint ventures. These ventures will cover the making and marketing of Sony’s Playstation games and Playstation consoles in China.

One will handle the hardware side, the other the software side. These two joint ventures will be set up in Shanghai’s free trade zone and will be established by a subsidiary of Shanghai Oriental Pearl and Sony’s China division.

One of the ventures will be majority owned by Shanghai Oriental Pearl with 51% ownership versus Sony China’s 49%. The other will be predominantly owned by Sony with a 70% ownership stake. Shanghai Oriental Pearl will own the other 30%.

It’s easy to look at China and see a ripe consumer base to push new consoles on it. But, it won’t be easy. Piracy is a huge problem in China. Plus, the software market is vastly different compared to the United States. Chinese developers and publishers have embraced the “free to play” model. Games start free, but then make money selling in-game upgrades or cosmetic items. Think League of Legends, DOTA 2 and Team Fortress except nearly all games have that system.

Free to play titles have historically struggled to leave a mark on console gaming. That is beginning to change with the launch of the Xbox One and PS4. Especially the PS4. A handful of titles including Warframe, Blacklight Retribution and DC Universe Online are free to play on PS4. More free to play titles are expected in the future.

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These joint ventures comes as China’s government suspended the ban on game consoles within Shanghai’s free trade zone. Game consoles were previously banned in the country from 2000 until now. China cited the negative effect on the mental health of its youth for the reason. They didn’t have a problem with free to play titles, though.

We’ll see if Sony or Microsoft can crack into the Chinese market in the months and years ahead. There’s potential there, but the tech giants will have to work for it.

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