For all its global popularity, Nintendo Co. has had relatively limited business in China. Now a deal with Tencent Holdings Ltd. has investors excited at the prospect that Nintendo’s Switch console and smartphone games could take off in one of the world’s biggest game markets.
Nintendo NTDOY, +1.29% shares shot up by more than 7% to a nine-year high Tuesday as investors welcomed its deal to put one of China’s most popular videogames—Tencent’s “Honor of Kings”—on the Nintendo Switch this winter. The game is called “Arena of Valor” in Europe, and a U.S. launch under that name is set for later this year.
For the moment, the deal, disclosed last week in a Nintendo video posted online, doesn’t directly involve users in China because the Switch isn’t sold there. But it could be a precursor to further arrangements allowing Nintendo to sell the Switch and its mobile games in China, said people familiar with the thinking of Nintendo and Tencent TCEHY, -0.55% executives.
“This is very positive in the longer term in getting Chinese publishers supporting the Switch,” said Macquarie Capital Securities analyst David Gibson. He said he expected Nintendo to introduce the Switch in China by March 2019.