Nintendo Switch heading to China

Nintendo Switch heading to China
Nintendo via CNN
Nintendo Switch Lite

Nintendo is teaming up with Tencent to launch its popular Switch console in China, but it may have a tough time winning over gamers more used to playing on their mobiles.

Nintendo and Tencent announced on Wednesday that the Switch will go on sale in China on Dec. 10, priced at 2,099 yuan ($297).

Despite having the backing of two of the biggest players in online gaming, the Switch faces an uphill battle in China.

Unlike the United States, where consoles are still very popular, smartphones are the dominant gaming platform in China, according to industry research company Newzoo.

“The other major console platforms, PlayStation and Xbox, have traditionally struggled to catch on in the market,” said Newzoo analyst Tianyi Gu. He added that Nintendo has a fighting chance, thanks to a strong roster of popular game franchises, such as Super Mario Bros., Zelda and Pokemon.

However, only one game from the Super Mario Bros. franchise has so far received the green light in China, according to Gu. And Nintendo will also face regulatory challenges.

Beijing has been cracking down on gaming for more than a year — limiting the number of new online games, restricting the amount of time kids can play and imposing curfews for online gaming for minors.

Chinese regulators say the efforts are aimed at curbing addiction and reducing nearsightedness in kids and teenagers.

When Beijing stopped granting new game approvals for nine months last year — preventing game makers from making money on popular titles — profits at Tencent plunged. Regulators started granting approvals again earlier this year, but Tencent said in a recent earnings report that it’s still seeing a slide in gaming revenue.

Chinese consumers will be reluctant to splash out on an expensive Switch device if it won’t have many games on it.

“The approval process for overseas titles is generally slower than for domestic games,” said Gu at Newzoo. “This means it is uncertain whether a strong line-up of launch titles can coincide with the hardware launch.”

Serkan Toto, founder of Tokyo-based consultancy Kantan Games, is more bullish on the Switch’s prospects in China, particularly when it comes to clearing regulatory hurdles.

“It is safe to say that Switch software won’t cause a lot of headache for Chinese regulators: Nintendo’s games on that platform don’t integrate gambling elements, avoid violence and never use political or other sensitive imagery,” he said.

But Tencent will still need to work hard to reassure buyers that they “will get games and an experience that phones or PCs won’t give them,” he added.

“It’s also critical to get Chinese developers to create exclusive games for the system that are tailor-made for the local audience. The best version of Tencent’s mega mobile hit Honor Of Kings, for example, is available on the Switch already,” Toto said.

Revenue from China’s games market will reach $36.5 billion in 2019, according to Newzoo. The United States will pull in $36.9 billion this year, overtaking China as the largest market by revenues for the first time since 2015.