China’s recent approval of 105 domestic games indicates a potential policy shift, suggesting a softer stance after the gaming industry faced an $80 billion market value loss due to recent tightened restrictions, as reported by Bloomberg. Notably, the approved titles include games operated by Tencent Holdings Ltd. and NetEase Inc., major game publishers in China significantly impacted by Beijing’s stringent regulations.
The approvals highlight the apparent support of Chinese authorities for the development of the online gaming sector, as mentioned by an industry association in a WeChat post republished by the official Xinhua news agency.
This move comes shortly after the National Press and Publication Administration (NPPA) announced new rules on Friday aimed at limiting the development of online games in China. These rules include an unspecified cap on spending by adult players, a ban on rewards for frequent logins, forced player-duels, and a prohibition on content violating national security. The announcement triggered a market reaction, leading to a substantial drop in Tencent and NetEase’s market value in Hong Kong.
Despite the NPPA’s subsequent approval of 40 imported gaming titles during Friday’s trading hours, investor confidence remained subdued. Industry analysts, including those from Citi, initially suggested that Tencent and NetEase might not be significantly affected by the new restrictions. However, both companies experienced a decline in US trading.
Responding to market concerns, the NPPA stated on Saturday that it would consider feedback from stakeholders, including companies and players, to enhance the rules. The sudden and sweeping restrictions have drawn comparisons to the tech-sector crackdown in 2021, where various agencies imposed abrupt curbs on sectors ranging from e-commerce to entertainment, affecting companies like Ant Group Co. and Alibaba Group Holding Ltd.
Bloomberg quoted Yang Wenfeng, a senior vice president with Shanghai-based games studio Paper Games, saying, “The latest events reflect the government’s desire for a larger, more diverse gaming landscape with innovative content of higher quality but one without excessive monetisation or ‘pay-to-win’ games.” He added, “The government prefers publishers to earn profits through fair practices and product innovation, rather than deepening monetisation strategies.”
The situation has highlighted the evolving dynamics of China’s approach to its gaming industry. The recent approvals suggest an effort to strike a balance between fostering innovation and quality content while addressing concerns about excessive monetization and potential negative social impacts. It remains to be seen how the industry responds and adapts to these shifting regulatory landscapes in the coming months.
