Nintendo has partnered with the world’s largest gaming company, Tencent, to sell Switch Console in China. Tencent is also one of the world’s most valuable technology conglomerate, one of the world’s largest social media companies, and also one of the world’s largest venture capital firms and investment corporations.
“With its huge gamer population, China is like a dry sponge for Nintendo,” says Hideyuki Ishiguro, a senior strategist at Daiwa Securities Co. “We’re now starting to see a scenario for Switch sales to continue increasing, and for earnings growth,” he continued.
The partnership is said to be a step closer to Nintendo’s plan on entering China’s gaming market. China’s Guangdong provincial culture and tourism department gave Tencent the consent to sell the Switch Console along with the test of “New Super Mario Bros. U Deluxe.”
Daniel Ahmad, an analyst at Niko Partner, warned investors not to get too excited about the jump saying, “China has a complicated regulatory environment and it is worth noting that consoles were only unbanned in 2014 after 14 years.”
According to him, the entry of Nintendo Switch is still very early in the process. “Nintendo 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 before Nintendo can build up a large library of official games in China,” Ahmad added.
Shuntaro Furukawa, President at Nintendo also acknowledged the problems that they would encounter. “Although the market for games in China is incredibly huge, the market for dedicated video game platforms is small. So even if we were to enter into China, the challenges we would face there certainly would not be simple ones. Even so, I would very much like to try and see how receptive the Chinese market would be to Nintendo IP,” Furukawa told the investors.