China has temporarily lifted a 14-year-old ban on selling video game consoles.
It paves the way for Sony, Microsoft and Nintendo to enter the world's third largest video games market in terms of revenue.
China saw video game revenues grow by more than a third in 2012 to nearly $14 billion last year.
Console makers are likely to face an uphill battle for market share in a country where a whole 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 an estimated 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% and mobile gaming was nearly 14%, the data also showed.
China banned games consoles in 2000, citing their adverse effect on the mental health of its youth.
For console makers seeking to expand in China, price may be a problem.
More than 70% of Chinese gamers earn less than 4,000 yuan ($634) a month, according to Hong Kong-based brokerage CLSA.
The new Xbox One sells for nearly $500 in the United States, while Sony's PlayStation 4 goes for just shy of $400.
New games for each console cost around $60.
The video game sector has been hit globally by the proliferation of free games on mobile devices and PCs, as well as on social networking sites. In China, the most popular video games are often free to play, with gamers only paying for add-ons such as weapons or extra lives.