China Reverses Game Console Ban as Publishers Await New Rules

China reversed course on a nationwide ban of video-game consoles, implemented in 2000 to protect youths from perceived corrupting influence, as it drafts new rules governing sales of the machines.

China’s ruling State Council temporarily suspended the ban and may allow consoles to be made in the Shanghai free-trade zone, it said in a statement Jan. 6. Hardware manufacturers such as Nintendo Co., Microsoft Corp. and Sony Corp. could benefit from entering a $10 billion market dominated by online and personal computer games.

China took the step as computer games have proliferated well beyond consoles to smartphones and the Internet, so people who want to play games already can in many cases. China had announced last year that the ban would be lifted within the Shanghai free-trade zone, which opened in September.

“The way they are ending the ban gives them a controlled way to let in global leaders to partner with domestic companies,” said Mark Natkin, managing director of Marbridge Consulting Ltd., a market research firm in Beijing. Companies should wait for the release of the rules, which may take another six months, before starting production and hardware sales, he said.

Yasuhiro Minagawa, a spokesman for Kyoto, Japan-based Nintendo, said the company is studying what it can do in the Shanghai free-trade zone.

The press office of China’s State Council didn’t respond to a faxed request for details on the rules.

Expansion Efforts

“China mainland is an attractive market,” Satoshi Nakajima, a Tokyo-based spokesman for Sony’s game unit, said on Jan. 7. The company, which sold 4.2 million of its PlayStation 4 units since it went on sale Nov. 15, “will seek to expand when there is an opportunity,” he said.

Microsoft and BesTV New Media Co., a subsidiary of Shanghai Media Group, in September said they formed a $79 million gaming venture to take advantage of the new rules.

“Microsoft is honored to be invited to participate in the Shanghai Free Trade Zone expansion efforts,” Joanna Li, a Beijing-based spokeswoman for Microsoft, said in an e-mailed response to questions from Bloomberg News. “Our goal is to deliver a new generation of innovative family entertainment experiences for people in China.”

The lifting of the ban is positive for Nintendo and entertainment consumption in China is growing, said Eiji Maeda, an analyst at SMBC Nikko Securities Inc. in Tokyo.

Sony American depositary receipts rose 5.4 percent, the most since May, to $18.25 yesterday in New York. The company plans to double smartphone sales in two years, Nikkei reported, citing an interview with Chief Executive Officer Kazuo Hirai.

Nintendo rose 11 percent to 15,850 yen, the highest close since July 2011, in Tokyo yesterday. Ubisoft Entertainment, the producer of the “Assassin’s Creed” game series, advanced 6.2 percent to 10.90 euros in Paris.

China is the world’s third-largest market for video games and will generate revenue of about $10 billion in 2015, according to data from PwC on the consultant’s website. The nation may overtake Japan to become the second-largest behind the U.S. by 2017, it said.

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