China Softens Up on Foreign Video Games Licensing

China Softens Up on Foreign Video Games Licensing

The video games regulator in China has given a nod for release of 44 foreign video games as the country’s tough stance on the gaming industry starts to thaw. Since August 2021, China has been rigid on the gaming industry.

The latest development will see 44 foreign games including 7 from South Korea released in the country. The approval for importation of games marks the end to China’s crackdown on the industry.

According to a separate list released last Wednesday, the regulator also approved 84 domestic games for December.

Among the imported games approved by the National Press and Publication Administration are 5, which will be published by Tencent Holdings, including Pokémon Unite by Nintendo and Valorant by Riot Games, according to the regulator’s list.

Following announcement by Chinese gaming industry regulator on the licensing, South Korean gaming stocks including Netmarble Corp, NCSOFT, Krafton, Kakao Games and Devsisters, rose by 2% to 17%.

Also read: Singapore Facing Shortage of Talent for ‘Phygital’ Metaverse

China Softens Up on Foreign Video Games Licensing

China and its tough stance on video games

During a year end meeting, Tencent founder Pony Ma said the company has to get used to the country’s tight licensing landscape, adding the number of new games that China approves will remain limited in the long run.

Unlike in other countries, video games need license from regulators before their release in China.

Its tough stance on gaming industry had a knock on effect on tech companies like Tencent and NetEase Inc that derive a significant chunk of revenue from publishing self-developed games as well as imported ones.

Since August 2021, China went after the country’s tech giants, which are among the world’s top gaming industry players with some estimated annual sales of $44 billion.

The crackdown on the industry is believed to have wiped more than $1 trillion off the value of the Chinese tech companies.

The South China Post reported that the crackdown also resulted in about 14 000 gaming related companies and studios going out of business.

Among the allegations levelled against the tech companies were abuse of monopolistic power and misuse of data.

Chinese authorities also argued the rules were to “effectively protect the physical and mental health of minors” while children under the age of 18 would be allowed to play online games between 8pm and 9pm.

China Softens Up on Foreign Video Games Licensing

Authorities soften up on the industry

In April last year, regulators started issuing licenses to homegrown games and approval of foreign games was seen as the last hurdle to be removed.

The world’s largest gaming company – Tencent was granted a total of 6 licenses according to sources with knowledge who spoke to Reuters.

Tencent received its first commercial license in November last year since August 2021 when the country got tough on the gaming industry.

Other imported games that were approved include CD Projekt’s CDR.WA “Gwent: The Witcher Card Game” and Klei Entertainment’s “Don’t Starve.”

Apart from Tencent, NetEase, ByteDance, XD Inc and iDreamSky also received game approvals in December. Shares of these companies – excluding NetEase – have recorded gains of between 0.8% and 5.2% in Hong Kong while Japan’s Nintendo rose 0.2%.

Big business

In 2021, China approved 76 imported games compared to 456 approved in 2017.China is referred to as the capital of gaming industry accounting for 25% of the global video game industry.

According to INTENTADIGITAL, gamers in China spend more time playing video games compared to any other activity.

There are over 685 million gamers in China, which is almost half its population.

At least 80% of gamers watch live streamlining while 70% of gamers play esports. Of the gamers, 48% are female.

In 2021, Chinese video game revenue was estimated to be around $46 billion, which was a slowdown from 2020 after authorities imposed strict play limits for under 18s and froze game license approvals.

On a global scale, the gaming industry is projected to continue growing towards 2025 with nearly 3.2 billion people estimated to have played games in 2022 alone, spending about $196.8 billion according to a global games market report.

Image credits: Shutterstock, CC images, Midjourney, Unsplash.