Nintendo Hits Pause Button on Brazil Operations

Japanese videogame giant Nintendo says it is hitting the pause button on operations in Brazil and will leave Latin America's largest market while it assesses how to deal with high import taxes.

"We are pausing on Brazil while we look for a sustainable (distribution) model," financial daily Valor on Tuesday quoted Bill van Zyll, the company's general manager in Latin America, as saying.

The Kyoto-based firm, producer of games such as Super Mario, blames high import duties for forcing it to shelve operations in Brazil, where its games are distributed by Gaming do Brasil, a subsidiary of Panama-based regional distributor Juegos de Video Latin America (JVLAT).

Van Zyll told Brazilian media last week that the business environment in Brazil, with high tariffs imports and where Nintendo does not have manufacturing facilities, had persuaded the firm of the need to withdraw for now from "an important market for Nintendo."

But he told Valor the company still believed Brazil could be a strong market with a young population and rising wages as the world's seventh largest economy develops, despite four years of low growth.

"We are going to go back to the drawing board to create a totally new model," said Van Zyll, adding that current stocks should satisfy demand through the end of the year.

Valor quoted an unnamed gaming sector source as saying high tariffs squeezed margins to a minimum and forced consumers to pay high prices for best-selling games such as Super Smash Bros, which retail for some 20 percent more in Brazil than in the US market.

Van Zyll told Globo's G1 Web news portal last week that pricing had to "make sense" for consumers and that setting up a local manufacturing base was not viable.