After the long weekend, there was a bit of news that slipped under the radar: The announcement of Nintendo’s partnership with Tencent to sell the Switch in China. Described by Bloomberg as “the world’s biggest games company”, Tencent is a Chinese tech giant. Arjun Kharpal (writing for CNBC.com) explains that investors had been calling for Nintendo to enter into the massive Chinese market for some time. And the announcement that “Regulators in the southern Chinese province of Guangdong approved the Nintendo Switch and the game “New Super Mario Bros U Deluxe” to be released in China” was met with an immediate surge in the share price value – levelling out somewhere in the region of 14%.
China and video games
China has traditionally had very strict policies about video games and specifically consoles entering the market in their country. Kharpal had previously explained how China had up until 2014 had a ban on foreign consoles. Hence, China has a massive audience that console-gaming simply has not reached. This untapped potential is obviously very attractive for Nintendo (as well as Sony and Microsoft). However, despite the new partnership and the Switch entering the Chinese market, there will be further hurdles to overcome. A Niko Partners’ analyst quoted in the CNBC article cautions:
The market should not get too excited because Nintendo and Tencent will still need approval from more regulators in the country… and Tencent will also need to submit each game for approval in China and ensure the games comply with content regulations. This too is a lengthy process and means that it will take some time…
Despite this, as brought out in the article, the Switch’s handheld-hybrid console and library of games make them unique. It may mean they are in a much better position to enter the Chinese market than their competitors. It seems then, that this could be yet another very important move by Nintendo.