China Lifts Ban On Console Videogames Can Its Thriving Arcades Survive?

BEIJING -- Now that China has lifted its longstanding ban on sales of home videogames, family entertainment center operators will be put to the test as Nintendo, Microsoft and Sony rush into a market estimated to be worth upwards of $22 billion. China's Ministry of Culture announced the end of the 15-year-old ban last week.

Since China's blanket restrictions on console games went into effect in 2000, FECs and arcades have prospered, along with a lucrative black market for the outlawed devices. Console games, on the other hand, violated China's censorship laws, and leaders were concerned Chinese children would waste time playing them.

Now Communist leaders are promoting entertainment and technology development as part of a marathon effort to shift the world's second-largest economy to more sustainable growth supported by domestic consumption and cleaner industries.

While eliminating the prohibition against the home games is welcome news for the big three gamemakers, they will still be subject to China's strict licensing laws, as well as its no-nonsense censorship regulations that forbid any game to endanger "national unity" or "public morality."

The recent move by China is one of the latest steps in a piecemeal easing of restrictions, which included certain companies that produced games within the Shanghai Free-Trade Zone. This loosening of the prohibition will force arcade and FEC owners to compete against at-home entertainment in much the same way American and European locations do.