China has temporarily lifted a ban on selling game consoles, opening the world's third largest video game market to foreign firms.
The country saw video game revenues grow by more than a third in 2012 to nearly £8.5bn last year, but console makers may struggle to take advantage in a country where an entire generation has grown up without a PlayStation, Xbox or Wii and where free PC and mobile games dominate.
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 per cent and mobile gaming was nearly 14 per cent, the data also showed.
"If Sony and Microsoft want to expand in China they need to think of changing their business model, and study the success of Internet gaming market providers where games are free but they charge money from operating games," said Roger Sheng, research director at tech research firm Gartner.
China had banned games consoles in 2000, citing their adverse effect on the mental health of its youth.
But the suspension of the ban permits "foreign-invested enterprises" to make game consoles within Shanghai's free trade zone and sell them in China after inspection by cultural departments, the government's top decision-making authority, the State Council, said in a statement.
The statement, posted on the council's website on Monday, did not give more details and officials were not available to clarify the ruling, or say how long the suspension would last.
For console makers seeking to expand in China, price may be a problem. More than 70 per cent of Chinese gamers earn less than 4,000 yuan (£400) a month, according to Hong Kong-based brokerage CLSA.
"To purchase a game at 200 or 300 yuan is unbearable or unthinkable for a normal player like me," said Yang Anqi, a 23-year-old student at Beijing's Renmin University who has played video games for more than a decade.
Nintendo, which makes the Wii consoles, told Reuters the ruling changed little from when China's government said in September last year that it planned to lift the ban.
"We are still not sure exactly what we will be able to do in Shanghai, and thereafter in Greater China," said Yasuhiro Minagawa, Nintendo's Japan-based public relations manager. "Both with hardware and software, there are many things we have to look into and so we can't say anything concrete."
Sony also sounded a note of caution.
"We do recognise that China is a promising market, and we will continue to study the possibility," said Satoshi Nakajima, a spokesman for Sony Computer Entertainment, the unit of Sony responsible for the PlayStation console business.
Microsoft was not immediately available to comment.