In a notable policy shift, China granted approval to 105 domestic games on Monday, hinting at a potential relaxation of its stance on the gaming industry. This move comes in the wake of a recent tightening of industry regulations that led to an $80 billion market value loss for the sector just last week, as reported by Bloomberg.
Of significance is the fact that the approved games include titles operated by Tencent Holdings Ltd. and NetEase Inc., two major players in China’s gaming industry that were significantly impacted by the stringent regulations imposed by Beijing. The approvals highlight a seeming show of support from Chinese authorities for the development of the online gaming sector, as indicated by an industry association’s remarks in a WeChat post, which was subsequently republished by the official Xinhua news agency.
The recent approvals follow an announcement made on Friday by the National Press and Publication Administration (NPPA), introducing new rules aimed at restricting the development of online games in China. These rules include an unspecified spending cap for adult players, a ban on rewards for frequent logins, forced player duels, and a prohibition on content that violates national security.
The market reacted strongly to this announcement, causing a significant drop in the market values of Tencent and NetEase in Hong Kong. Despite the NPPA’s subsequent approval of 40 imported gaming titles during trading hours on Friday, investor confidence remained restrained.
Industry analysts, including those from Citi, initially suggested that Tencent and NetEase might not be severely impacted 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 abrupt and comprehensive nature of these restrictions has drawn comparisons to the tech-sector crackdown in 2021, where various agencies imposed sudden restrictions on sectors ranging from e-commerce to entertainment, affecting companies such as Ant Group Co. and Alibaba Group Holding Ltd. Bloomberg cited Yang Wenfeng, a senior vice president with Shanghai-based games studio Paper Games, who offered insight into the government’s perspective, noting that the recent events reflect the government’s desire for a larger, more diverse gaming landscape with innovative content of higher quality, but without excessive monetization or “pay-to-win” games. He emphasized that the government prefers publishers to earn profits through fair practices and product innovation rather than deepening monetization strategies.
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