BEIJING China has fully lifted a 14-year ban on selling video game consoles, but foreign console makers hoping to make a killing in a potentially huge new market will first have to find a way around the country's onerous censorship rules.
The likes of Microsoft Corp (MSFT.O), Sony Corp (6758.T) and Nintendo Co (7974.T) will henceforth be able to manufacture and sell consoles in China through "foreign-invested enterprises" in Shanghai's free trade zone, Shanghai's government said on its website on Monday.
China is the world's third biggest gaming market, where revenues grew by more than a third in 2012 to nearly $14 billion last year, but piracy and the dominance of PC and mobile gaming will leave little room for legitimate console and game sales.
Console games will also have to win approval from Shanghai's local culture department, which will ensure they do not harm China's national unity, territorial integrity or reputation - or promote racial hatred, obscenity, gambling, violence or drugs.
That long list could in theory prevent most of the world's most popular gaming blockbusters - such as Grand Theft Auto and the first-person shooters, Battlefield and Call of Duty - from entering the world's third biggest gaming market.
"Game developers should be worried about selling their content in China, especially when you talk about the violent games, shooting people's arms, heads popping off, and a lot of games also have political background, such as America against North Korea," said Serkan Toto, a Tokyo-based video games analyst.
"A lot of these games are actual multi-million dollar games, so I'm not really sure how these kind of games will resonate with Chinese censorship - my feeling is probably not that good."
The absence of consoles has left PC games with almost two-thirds of the market, according to data released at the annual China games industry conference in December. Browser gaming accounted for just over 15 percent and mobile gaming was nearly 14 percent, the data also showed.
China had banned games consoles in 2000, citing their adverse effect on the mental health of its youth. It temporarily lifted the ban in January.
"Grand Theft Auto stands for all of these problems: it's successful because it's controversial, and controversy always sells," said Toto.
In September, Microsoft formed a joint-venture with China's BesTV New Media Co Ltd (600637.SS) and invested $237 million in "family games and related services".
"The joint venture registration in the free trade zone is the first step of many to come for Microsoft and BesTV," Microsoft told Reuters on Tuesday.
The company declined to comment on whether its flagship Xbox consoles would be made available in China.
Yasuhiro Minagawa, manager of public relations at Nintendo, said the company had nothing to announce regarding the sale of its hardware in China.
Sony was not available for immediate comment.
(Additional reporting by Beijing Newsroom and Sophie Knight in TOKYO; Editing by John Stonestreet)