Nintendo shares climb with China's lifting of console ban
Nintendo shares climb to a two and a half-year high following reports that China was lifting its 14-year ban on the sales of foreign game consoles.
According to a Reuters report, the Japanese console maker saw its shares soar as much as 7.5 percent after news broke Monday that the Chinese government would allow video game consoles to be soldin the country, lifting a ban that spanned almost 14 years.
The announcement meant market players such as Nintendo, Sony, and Microsoft would now be able to target the world's third-largest video game market by revenue.
"Nintendo hasn't had a catalyst for a long time, so if it can revive [via] the Chinese consumer market then it would be positive," a Tokyo-based trader said in the report.
In its last fiscal year, ended March 31, the company missed its profit forecast by half primarily due to less-than-stellar sales of its game console, Wii U. It also made a net loss of 43.2 billion yen (US$434 million) the previous year.
While the latest announcement may bode well for console makers, these players will be addressing a tough gamer market that is unfamiliar with a Wii, PlayStation, and Xbox, and used to playing games that are free--paying only for addons.
The companies also will have to reconsider their price points, Reuters noted, as over 70 percent of China's gamers earn less than 4,000 yuan (US$655.56) a month, which is about the price of an Xbox console. In addition, the Chinese market already is flooded with consoles modified to run counterfeit games.
A spokesperson from Nintendo told the news agency that the company remained uncertain on the opportunities in China.
The Chinese government said foreign-invested game console vendors would be allowed to carry out production and marketing activities in the Shanghai Free Trade Zone. However, games content would still be subject to censorship.
The government last month banned first-person shooter game, Battlefield 4, for featuring content it said threatened China's national security and was a form of cultural invasion.