The Rainbow Speakers, from mainland China's Myx-Games, features four integrated speakers, a headphone socket and line-in connection for PSP and MP3 players.

Makers await latest chipsets of nextgeneration consoles. Compatible units for handheld and existing consoles are still mainstream.

The video game industries in mainland China and Hong Kong are forecast to reach new growth levels with the upcoming release of new game consoles. The mainland China market alone is estimated to grow by 20 percent annually.

While many makers have released minor electronic accessories such as earphones and storage devices, the majority of makers are still waiting for the release of open solution and licensed chipsets of upcoming consoles before proceeding to product development and mass production of major devices. These include wired and wireless gamepads and controllers, and other devices that require licenses from major console makers such as Nintendo, Sony and Microsoft. Both Nintendo's Wii and Sony's PlayStation (PS) 3 are expected to hit the stores by end-2006.

Although expectations are high for these next-generation consoles, the success of these consoles is dependent on price levels and third-party game support, according to interviewed makers. One maker in Hong Kong expects about 100 games to be released monthly for the PlayStation 3 and about 10 for the Wii.

Nevertheless, makers in mainland China and Hong Kong are rolling out assorted video game devices and accessories, which cater mainly to handheld players and existing consoles such as Sony's PlayStationPortable (PSP) and PS 1 and 2, Microsoft's Xbox and Xbox 360, Nintendo's Gameboy and DS, and even PCs.

	Model KC-8216, from mainland China's King Chuang, is a wireless 2.4GHz gamepad for PC gaming.

On offer from mainland China are gamepads and controllers, game memory cards, cables, as well as stands and various CD cases. For the handheld console segment, suppliers offer portable speakers, docking stations with charging devices and speakers, stereo earphones, and carrying cases and frames with light features. A number of mainland makers also offer 8- and 16-bit consoles, and handheld players with built-in games.

For instance, Zhongshan Subor Educational Electronics Co. Ltd offers model SB-Z08, an 8-bit/16-bit handheld game player with a 2.4in color TFT display. The unit weighs 101.8g and measures 121x68x30.3mm.

Subor plans to release more portable video game players with PMP functions.

Another company, King Chuang Tech & Electric Co. Ltd, offers the KC-8216, a 2.4GHz PC-USB gamepad. The product allows up to eight players to play simultaneously. Its operating distance is about 10m. The unit features five axis controls, eight fire buttons and L/R triggers. It has a low current consumption and uses two AA batteries. It can be used continuously for 200 hours (with vibration on) or 400 hours (with vibration off). The unit is compatible with Windows 98/Me/2000/XP and USB 1.1 or 2.0.

King Chuang also offers more than 400 game accessories that are compatible with popular game consoles and PC systems.

China Shenzhen Firstsing Co. Ltd offers the XB3028 headset for Xbox 360 game consoles. The unit features volume control and mute switch. Its adjustable microphone boom allows the microphone to be placed at any angle to reduce noise or increase pickup. Its headband is adjustable and features premium ear cushion design.

Pega HK (Fuqi Electronics) offers the PG-8305B, a console stand for the Xbox 360. The unit features a fan that helps cool down the console. The unit can also be used as a disc case.

Pega also offers joypads, joysticks, adapters, chargers, display lighting systems and hard-side carrying cases. The maker's products are compatible with the PSP, PS1, PS2, NDS, GameCube and Xbox. In the next few months, Pega plans to release more devices for PS3 and Wii consoles.

For the handheld segment, makers emphasize complementary features such as portable and compact designs. Docking stations with charging functions and built-in speakers are also becoming mainstream.

For example, the BH-PSP07790 Rainbow Speakers, from Myx-Games Interactive Co. Ltd, is designed specifically for the PSP. The unit has four integrated stereo speakers, and also functions as a charging station. The player can be placed at its base, providing maximum viewing angles. It comes with an IR remote control.

The BH-PSP07790 comes with a carrying case with three compartments: one each for the speaker's audio system, the PSP and for otheraccessories.

	The 1106, from Hong Kong's Naki World, is an external memory storage device that features a Memory Stick Duo card interface that plugs into the PSP's card slot.

According to these companies, the development of compatible controllers for the Xbox 360, PS3 and Wii will be held back until the respective chipsets are made available to makers. For instance, chipsets of the Xbox 360, which has been in the market for a year now, have not yet been released.

Gopro (International) Ltd expects the chipsets for the next-generation consoles to be available in Q1 2007 and will proceed soon after with the software engineering, interface design, tooling and testing of compatible gamepads and steering wheels. The company intends to maintain PC support in both products, regardless of whether they are for Wii or PS3.

The earliest time that Blazepro Technology Co. expects compatible controller chips for the next-generation consoles to emerge is six to seven months after the consoles are released. Blazepro expects sales of PS2 and Xbox accessories to carry on for two more years. Nakiworld Co. Ltd also acknowledged that despite the release of the PS3, sales of PS2 accessories will remain strong for a few more years.

However, while makers from other regions await the release of open solutions chipsets, Gopro expects Hong Kong companies to release compatible controllers for the nextgeneration consoles ahead of their neighbors, while ensuring that all licensing issues are met accordingly. In the meantime, the next-generation console devices that makers offer are limited to add-ons that do not require controller chipsets.

For instance, for the Xbox 360, Naki World offers accessories such as a remote control and a cooling station that doubles as an A/V converter. The product converts the signal from the console's video output interface to component video, D-sub (VGA), optical and S-video signals.

Other companies have also released minor accessories such as video cables and decorative front panels for the Xbox 360.

Hong Kong makers are concentrating on devices and accessories for the handheld console market, which is currently dominated by the Nintendo DS Lite and the Sony PSP.

Naki World, in the meantime, is focusing on producing accessories for existing home and handheld game consoles such as external memory storage enhancers for the NDS Lite and PSP. It has recently released clip-on memory expanders for both handhelds.

These memory expanders connect to the systems' memory card interfaces but use mini external hard disks as storage media. The company has a MicroSD version for the Nintendo DS Lite, and a MemoryStick Duo version for the PSP. According to the company, these products are necessary for storing a library of games downloaded from the Internet. The products have licenses from SD and Sony.

Gopro offers a foldable game case for the DS Lite, which collapses into a compact matchbox shape. The case holds as many as six DS Lite games. It also has various battery chargers/ adapters for the DS Lite.

For the PSP, Gopro's products include protective/carrying cases, game cases for holding up to eight games, earphones and power adapters.

Blazepro has recently developed a video adapter for the PS2, which uses software to convert PS2 A/V output into highdefinition video. The device plugs into a regular PS2 controller's A/V output. Using built-in software, the device converts the standard video output into high-definition video. This device also includes a programmable parental lock that allows users to regulate at which hours the PS2 may be used.

For OEM clients, Blazepro has developed an adapter that enables the 8-bit Nintendo systems to play 16-bit games. For this project, clients shoulder the fees for the licenses.

According to Gopro, accessories for the DS Lite and PSP are its current bestsellers. The company expects this to continue through H1 2007. In H2, however, the company believes that accessories for the Wii and PS3 may dominate its sales. The company predicts that accessories for both consoles will actually be available in H1 2007, but supply will overtake demand. Sales of these accessories are expected to pick up as console sales saturate the market in H2 2007.

The fierce competition among makers forces most of them to maintain current prices despite increases in production expenses related to component and material cost, and workers' wages.

RoHS-compliant products are also given higher quotations. FOB prices of such products in Hong Kong, for instance, are higher by about 10 percent to 15 percent. Mainland China makers, however, offer steady prices for large-volume orders and higher quotations for small-volume buyers.

Prices of basic models of gamepads on the mainland start at $2 per unit. Specialized functions, the number of auxiliary buttons, and special grips and form factors are key considerations in determining the price range. High-end wireless models or those with USB connectors are quoted at $9 to $12.

Prices of handheld game players go for more than $20.

In Hong Kong, Gopro expects its PS2 controller prices to drop to $3 per unit. The company plans to release a Bluetooth PS3 controller in 2007 at a target price of about $14. Wii controllers will be priced between $14 and $15 per unit.

Blazepro expects the prices of video game devices and accessories to remain at the same levels in 2007 since these are already very competitive.

Naki World's memory storage extenders for Nintendo DS Lite and PSP retail for about $50 per unit. The maker's official Superman movie PS2 gamepads sell for about $15 each.

Most makers in mainland China and Hong Kong cater to OEM and ODM businesses. Europe and the United States are major export markets. Southeast Asia, East Asia and South America are secondary markets.

For instance, about 60 percent and 20 percent of Gopro's output goes to ODM and OEM clients, respectively. The rest is sold under Gopro's Digital R brand. The United States and Japan each take up 40 percent of Gopro's exports while Europe accounts for the remaining 20 percent.

OEM takes up more than 50 percent of Blazepro's output and the rest of its products carry its in-house brand. The United Kingdom is Blazepro's largest market, accounting for about half the company's total sales. Blazepro intends to focus more on trading and minimize its manufacturing activities or until the market for compatible accessories becomes more lucrative.

Nakiworld does OEM, ODM and own-brand business. It ships its products worldwide, with the United States as its biggest market. Nakiworld focuses on the fan base market for pop culture figures. The maker holds the licenses to manufacture game devices and accessories with Star Wars, Superman, Justice League and Spider-Man logos.

Mainland China's Subor exports more than 50 percent of its output to Europe and the United States. About 80 percent of its overseas business comes from OEM orders.

Pega exports 90 percent of its video game device to the Americas, Southeast Asia and Europe. The company said it plans to expand overseas business to South America.

Mainland China is home to an estimated 400 to 500 manufacturers of video game devices, including Hong Kong and Taiwan companies that have set up several manufacturing sites in the area. The southern province of Guangdong-- particularly the cities of Shenzhen, Dongguan and Zhongshan-- hosts about 70 percent of makers.

Guangdong, a manufacturing hub of video game devices, abounds with electronic industries; subcontractors that do mold design and making, plastic injection, SMT services; and components and technology solution providers that help manufacturers expand their manufacturing capability. The province is conveniently located near international shipping ports and markets, where the latest technology and development trends can be acquired.

Myx-Games' 12,000sqm factory in Shenzhen has 14 production lines. The facility is equipped with plastic injection machines, tooling rooms, pad printing and bonding facilities, automatic SMT and clamshell/blister packaging workshops. It has a monthly capacity exceeding 600,000 PS2 gamepads. It has QC08000 certification.

Subor maintains two factories with a total of 12 production lines. The company is ISO 9001:2000-certified, and all its products are CE-, ASTM-, CNFI- and CHPR-certified. The company has a monthly capacity of 400,000 game devices and accessories. Its R&D team consists of 40 engineers. Subor takes about 40 days to design a new product. The maker also offers educational learning sets, language-learning cassette recorders and video games, and portable DVD/VCD/MP3 players.

Subor has also set up a customer support center in the United States. The company stresses that overseas customer support is essential to the success of any gaming device manufacturer.

Hong Kong's position as a top player in global trade makes it a prime sourcing location for video game devices and accessories. The region boasts a supply base made up of third-party makers that have been producing accessories for game consoles over the years. Buyers looking for first-party merchandise will also find them from Hong Kong's large pool of trading companies. Hong Kong is home to between 10 and 15 third-party manufacturers, and scores of trading companies. These include leading thirdparty makers such as Blazepro, Gopro, Naki World, Prism Technology, Innovation Technology and Freetroncom. Some third-party makers, such as Blazepro, also trade in first-party products.

The experience of these makers have equipped them with the tools needed to shrug off the competition. Each of these companies can do complete product design, software programming, hardware design and manufacture, and marketing facilities to ensure their success. They also make it a point to monitor the market closely for changes in product design thrusts.

Gopro believes that, compared to most of their counterparts in mainland China, Hong Kong's suppliers of gaming devices can offer more than just manufacturing services. Makers can deliver everything from product concept and design to manufacturing and packaging; as well as marketing ideas and aftersales support.

Naki World believes that Hong Kong's geographic advantage, trade history and proximity to mainland China make it the prime sourcing center for gaming accessories. The region's electronics exhibitions ensure that the exchange of knowledge and ideas between professionals remains consistent.

Gopro intends to continue manufacturing gamepads and controllers for Sony's PS2 in 2007, albeit in smaller volumes. In 2007, the company targets to produce about 1.9 million gamepads and 312,000 steering wheels for assorted consoles. As of Q3 2006, about 80 percent of the company's production was devoted to DS Lite and PSP devices and accessories.