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Nintendo shares surge as China lifts console ban

Bloomberg

Nintendo Co., the maker of Wii U game consoles, is riding high in Tokyo trading after China lifted a 13-year ban on gaming machines this week.

Nintendo shares rose 4.28 percent Friday to close at ¥16,080. China’s ruling State Council temporarily suspended the ban and will draft new rules allowing consoles to be made in the Shanghai free-trade zone, it said in a statement Monday.

Consoles such as the Wii U and Sony Corp.’s PlayStation were banned under a 2000 rule to protect youths from the perceived corrupting influence of video games. Nintendo’s prospects for meeting its sales and profit forecasts this year depend on winning sales amid new devices from Sony and Microsoft Corp. released in the past two months.

“Nintendo has to explore markets in Asia, including China, in order to increase its sales and profit,” said Tomoaki Kawasaki, an analyst at Iwai Cosmo Holdings Inc. in Tokyo. “China is a promising market, even though there is a risk games will be pirated.”

China had announced last year that the ban would be lifted within the Shanghai free-trade zone, which opened in September.

Yasuhiro Minagawa, a spokesman for Kyoto-based Nintendo, declined comment on the share rise. The company is studying what it can do in the Shanghai free-trade zone, 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.

President Satoru Iwata vowed in October that Nintendo would meet a forecast for ¥100 billion in full-year operating profit. Analysts are skeptical, with the average estimate for profit at ¥55.6 billion.

Nintendo’s family-focused content is losing its appeal as titles were delayed, casual gamers migrate to mobile devices, and hard-core players opt for faster Sony and Microsoft consoles. The world’s biggest maker of video game machines also refuses to offer games with its lineup of iconic characters such as Mario and Zelda on smartphones and tablets, limiting its ability to profit from surging demand by online players.