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Chinese Market Won't Help Nintendo

When China recently lifted its longtime ban on video-game consoles, it opened a hungry market for manufacturers such as Sony, Microsoft and Nintendo. The ban - in place since 2000 - prevented gaming companies from marketing to the most populous nation on Earth because Chinese officials were concerned about the violent content of some games, citing the potential for moral decay. Nintendo shares skyrocketed on the announcement from the Chinese State Council, but those gains were lost within days upon the companies sober earnings announcement.

Nintendo Co. Ltd projected losses for the year ending March 31. In the Jan. 17 announcement, the gaming company also reduced its global sales forecast for the Nintendo Wii U, the Wii and the 3DS hardware and software. Will reaching the burgeoning Chinese market help Nintendo as it struggles to compete against the likes of Sony and Microsoft, both of which have released next-generation consoles recently? It's unlikely for a variety of reasons.

In the 14-year absence of legal gaming consoles, the Chinese market has adapted its tastes to mobile gaming. In fact, China's mobile gaming industry is still growing faster than PC or online gaming. Just last year, the sector increased by almost 250 percent to reach $2 billion of the $3.5 billion global mobile gaming market. But, although its competitors have entered the Chinese marketplace by selling mobile devices and adapting its software for mobile gaming, Nintendo has little experience with mobile gaming.

"Nintendo has long kept its franchises to itself-none of its games, not Mario, Zelda or Pokemon are offered on any other platform," Roberto Ferdman wrote in October. "The company has also skipped out on the smartphone and tablet game market, insisting that focusing on its hardware and existing franchises is still the key to keeping its fans content. Entering the smartphone and tablet world, Nintendo has held, would jeopardize its other businesses, since an ability to play its games on iPhones and iPads would discourage people from buying Nintendo devices."

Are Chinese gamers likely to hop on board a ship that has little brand-recognition in the nation? Unlikely. The manufacturer places too much importance on the selling power of its cast of characters, and even that strategy has been failing lately. The release of its "Super Mario 3D World" sold dramatically fewer copies during its debut week in Japan than either of the franchise's predecessors, and boosted console sales only slightly. Such a small bump by what was expected to be the biggest Wii game in 2013 was even more disappointing considering the release came four months before the PlayStation 4 launched in Japan.

What will help Nintendo? Certainly not relying on Wii U sales in the Chinese market when it can hardly get them off the shelves in a world that has followed the gaming company for a generation. If Nintendo hopes to compete in a 21st century market, it must expand its portfolio to compete on non-proprietary devices. Mobile gaming is the future, and Nintendo needs to jump on board.