It's official folks: in China, the Xbox One and PlayStation 4 will be operated by the same conglomerate, Shanghai Media Group. How's that for friendly rivals?

Chinese media sites such as Sina Games and People's Daily are reporting that the proposed merger is going along as planned. Bloomberg Business reported today that shares of BesTV and Shanghai Oriental Pearl Group, the two companies that are merging, have gone up in day trading. Kotaku first reported on the possibility of this merger in September.

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BesTV, an internet TV service provider. is Microsoft's console partner in China. The two companies released the Xbox One, the first official video game console in China in 13 years, on September 23 of this year.

Shanghai Oriental Pearl Group, a "cultural" company involved with TV, advertising and media investments, is Sony's console partner. The two companies have yet to announce plans about the PlayStation 4 in China other than that the console will come to the country. Bloomberg reported on that back in May of this year.

Both SOPG and BesTV are subsidiaries of the State-affiliated Shanghai Media and Entertainment Group (or SMEG). Their new merger is tentatively called Shanghai Media Group. Yes, Shanghai Media group, a subsidiary of Shanghai Media and Entertainment Group.

So what does this all mean? Right off the bat, Chinese media sites such as Sina.com speculate the merger means SMEG will have double the market penetration for their media and information since they operate both living room consoles. Effectively, it doesn't matter which console gamers in China purchase, they're basically purchasing SMEG media machines.

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That said, no one knows how this will affect games. The Chinese version of the Xbox One suffers from a lack of games that doesn't seem to be going away anytime soon.

The comments of Li Ruigang, chairman of Shanghai Media Group (aka SMG), don't seem to clarify the gaming situation either. At the press conference, Li told reporters that the focus of the Xbox One and PlayStation 4 in China is to expand video game development in the country.
Here's Li's full quote via Sina:

When BesTV joined forces with Microsoft, we already announced that we would invest in game development, and we also discussed cooperation with various big game developers in China to bring more games to home consoles (...) Bringing foreign games into the country doesn't make BesTV money, doing development and operating the sales platforms ourselves provides the biggest profits. The people who make money selling game discs are companies like Sony and Microsoft, so relying on selling discs is definitely not what we want.

Judging from what Li says, it appears the Shanghai Media Group doesn't see a difference between Xbox One and PlayStation 4. It also shows that the State-affiliated company, and to an extent the Chinese government, is more interested in creating Chinese games rather than letting foreign games into the market.

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Hopefully the games that SMG ends up putting out on the Xbox One and PlayStation 4 are good, even good enough to be exported out West.

百视通东方明珠合并 会给国行游戏机带来什么?[Sina Games]

百视通东方明珠合并 “新股”将复牌 [People's Daily]

BesTV, Shanghai Oriental Surge on Media Merger: Shanghai Mover [Bloomberg]

Kotaku East is your slice of Asian internet culture, bringing you the latest talking points from Japan, Korea, China and beyond. Tune in every morning from 4am to 8am.

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Eric is a Beijing based writer and all around FAT man. You can contact him @FatAsianTechie@gmail.com or follow him on Twitter @FatAsianTechie.