Nintendo soars as Tencent wins Switch game approval in China

Bloomberg

Nintendo Co shares jumped after China’s Tencent Holdings Ltd won approval to distribute one of the company’s games for its Switch console, a sign the Japanese company may benefit from growth in the world’s largest games market.
Tencent received approval for the test version of New Super Mario Bros. U Deluxe for the handheld device, according to a notice on the website of China’s Guangdong provincial culture and tourism department.
A Nintendo spokesman confirmed that Tencent had applied for the sale of Switch hardware, but could not comment specifically on the Guangdong approval, saying it was just one part of the
entire process.
Nintendo’s stock surged 14 percent, the most since July 2016 at the height of the Pokemon Go frenzy.
Tencent could prove an invaluable ally for the Kyoto-based company in China where gamers have historically shunned consoles in favour of smartphones and PCs. The alliance could provide a jolt to growth prospects for the Switch. Nintendo in January cut its outlook for the console’s shipments, raising questions about demand for the three-year-old device.
“With its huge gamer population, China is like a dry sponge for Nintendo,” said 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.”
Tencent shares didn’t trade in Hong Kong, which was closed for a national holiday.
China is the world’s largest gaming market, but consoles accounted for less than than 2 percent of industry revenue in 2018, researcher Newzoo estimated last year.