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Photographer: ChinaFotoPress/Getty Images Photographer: ChinaFotoPress/Getty Images

Now that China's ban on retail sales of video-game consoles has been lifted, Sony and Microsoft have made some progress against the flood of illegal consoles in one of the world’s biggest markets. Just don’t expect foreign consoles to have the same impact for their corporate parents as foreign smartphones.

Xbox One and Playstation 4 will combine to sell about 550,000 consoles in China this year, according a report released Wednesday by Niko Partners, a market research firm that studies gaming in Asia. A separate report by IHS projects worldwide sales of 34 million PS4s by the end of this year alongside 20 million Xbox Ones—and that means China isn’t yet shaping up to be a major market for either Sony or Microsoft.

One major issue is that Chinese gamers tend to play on personal computers or mobile devices rather than through a machine hooked up to a television. About 9 million people in China will play games on their TVs this year, according to Lisa Hanson of Niko Partners. By contrast, hundreds of millions of people play mobile or PC games. “There’s either a ton of room for growth or this is not going to be big,” says Hanson.

The availability of legal Xbox and Playstation devices has been driving down sales of China's widely available knockoffs. Niko Partners expects gray market sales of 500,000 this year, down from about 800,000 last year. But Chinese consumers, unlike their American counterparts, are about as likely to use a smart TV or Android set-top box to play games as they are to use a console. Niko expects revenue from television-based gaming to increase to $3 billion by 2019, up from $654 million this year, but even that would account for a tiny fraction of the overall market. Representatives for Sony and Microsoft didn’t immediately respond to requests for comment.

Consoles are expensive compared with other modes of gaming. China’s restrictions on content deemed inappropriate or offensive by the government means relatively few games are available. Beijing has approved 31 games for consoles so far, and 20 more titles are awaiting approval. The government has pledged to ramp up the process so that 100 new games can be approved each year by 2017.

In the meantime, however, some multinational publishers are shunning consoles in China. Call of Duty isn’t available for Chinese consoles. But Activision, the maker of the game, produces a free version for personal computers that is available only in mainland China.

Even as they’re competing against other forms of gaming, the competition between Xbox and Playstation in China has an awkward twist to it. China requires the companies to sell their products through a joint venture with a local partner. Microsoft began working with BesTV, while Playstation joined forces with Shanghai Oriental Pearl Group. The two Chinese companies merged late last year.