China creates Shanghai-based free trade zone, ending game console ban

China's ban on video game consoles is coming to an end with a newly-established free trade zone in Shanghai that will allow foreign-funded companies to sell gaming hardware in the country, reports The Wall Street Journal.

The Shanghai zone will open on Oct. 1, and regulations will be phased in over the next two or three years, according to a report at PC World.

Rumors that the 13-year-old ban would be terminated were confirmed earlier today by China's State Council. The Council published a set of regulations that will govern the "experimental" free trade zone to be set up in Shanghai. The rules put forth by the Council allow foreign companies that run production and sales in the zone to sell game consoles, once the hardware receives approval from China's Ministry of Culture.

China's prohibition on game consoles began in 2000, but despite the ban, sellers have been able to bring game systems to China through Japan and Hong Kong. Online and mobile games have been permitted in the country and have become popular, bringing in high revenue with "freemium" models.

Xue Yongfeng, an analyst with Beijing research firm Analysys International, told PC World that lifting the ban will create a major opportunity for console companies as the Chinese market opens. However, manufacturers will need to adapt their business models to suit Chinese gamers -—many of which are accustomed to free-to-play games, he explained.

"If the companies just try to sell their game consoles without changes, I think it will be difficult," Xue said. "The price of these console games is quite high. Chinese gamers will be willing to pay for the console hardware, but they don't have a habit of buying expensive games."

Earlier this week, Microsoft announced it would invest $237 million in a joint venture with Chinese Internet TV company BesTV New Media Co. within the Shanghai zone. The partnership will develop "family games and related services."