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Wednesday, January 15, 2014

Why Are Those Investors So Excited?

By LUDWIG VON KOOPA - Unbanned China sales are meaningless.

To the dismay of some recent sellers of Nintendo stock, it recently surged to an almost two year high. While KoopaTV doesn't really care about the performance of videogame companies in the stock market (with the exception of one time), quite a few people think that Nintendo's recent rise means some awesome news on the way. No, it's because of China's announcement about unbanning the sale of game consoles. This disproportionately affected Nintendo's stock over Sony's and Microsoft's because... remember, videogames are Nintendo's core competency, unlike the other two console manufacturers. By the way, Nintendo does have awesome things on the way. Like all of those upcoming Wii U games.

Is the increased stock price worth it because of the China unban? According to Kotaku, (usually a bad source but on this subject they actually support what they're writing) this isn't a big deal at all. And China's Ministry of Culture still personally censors stuff that can be seen as anti-China. So good luck getting Super Punch-Out!! there, 'cause Hoy Quarlow wouldn't be appreciated. You know, emaciated old man. Those Chinese don't take care of their elders with food! He also cheats.



There is this so-called Grey Market, and if you look at the Kotaku article's pictures it's pretty blatant. The key quote from it is,
However, the ban on consoles hasn't stopped Chinese gamers from buying consoles or playing console based games. In fact, the main limiters on console sales in China to the general public are supply and price. It's hard to imagine but the vast majority of China's 1.3billion people are unable to afford a console. According to People's Daily, the mouth piece of the government, the average yearly income across China is about US$5,900 a year.
A related article has another key quote,
 "Piracy, on the other hand, is doing more to keep game consoles out of China than any government edict ever could."
The fact is is that if the government ban is being relaxed/ended, that still won't change any of the other factors going on in China. The fact that gaming is too expensive a hobby. The piracy rate and complete lack of respect of intellectual property. Does Nintendo or anyone else really need to tie up their resources in this region right now? The iQue is a thing, might as well stick with that.

Perhaps if nothing new is happening with China, then Nintendo's stock has simply been undervalued all along and that's finally being corrected. This won't cause a lot of new sales or anything, but perhaps all the great games already out for Wii U and coming out for Wii U will.


Ludwig holds no stock in Nintendo, as you can read in our new Disclaimers page. He's also not a qualified financial analyst.


Proof Ludwig isn't a qualified financial analyst is only a click away: Nintendo's stock drops back down!

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