The Chinese government has ended a nine-month freeze on new approvals of video game licenses, the South China Morning Post reported on Friday, after the establishment of a “new body to review ethical issues in gaming” and the completion of a re-organization among government media agencies.
All video games released in China must be approved by censors as well as a separate agency that handles commercialization. The end of the freeze relieves a massive headache for Chinese multimedia giant Tencent, the world’s largest gaming company, whose stocks plummeted precipitously as the situation dragged on without resolution—as well as many of its competitors. But the freeze was the result of a shuffle-up in the Chinese government that placed media agencies directly under the thumb of the propaganda ministry.
The Post wrote:
“The first batch of games have been reviewed. We will hurry up to issue licenses,” said Feng, deputy head of the State Administration of Press and Publications (SAPP), according to multiple Chinese media reports on Friday. “There is a big stockpile of games for review, so it takes a while. We will continue to work hard. [We] hope everyone can be patient,” he said in remarks seen on video, without providing any further details.
Feng’s remarks, delivered at the country’s annual gaming forum held in the southern province of Hainan, remove a huge regulatory overhang that has put China’s major video games producers on edge and knocked billions off market valuations. China gaming stocks surged on Friday.
China’s authoritarian government is notoriously concerned with its definition of social stability, and gaming is one part of the economy that has faced crackdowns as officials raised concerns about the amount of time some citizens spend playing them (particularly youth). During at least part of the freeze, however, authorities left open a back channel for game approvals that reportedly turned into a de facto licensing black market.
Lisa Hanson, a managing partner with analytics firm Nikos Partners, told the Post that demand has not fallen in the meantime.
“We heard that the first announcements will be for domestic games, with foreign games to follow,” Hanson told the paper. “A few days or weeks will not make a difference to the gamers, but the game publishers will have a lot of work to do.”
Per TechCrunch, regulators plan to crack down on games that feature pornography, gambling, violence, or that “rewrite the history” of China, as was the case in Tencent’s Honor of Kings, which state media accused of muddying the historical record of several famous historical Chinese. They also will ask developers maintain “a stronger sense of social responsibility,” TechCrunch wrote, though Feng also said that they plan to encourage game companies to increase the quality of their products and expand overseas to help “promote Chinese culture, propagate Chinese values and showcase Chinese tastes.”
China is the world’s largest video game market at over $30 billion annually in revenue, according to the Post, and suffered its slowest growth in 2018 at five percent due to the freeze. However, many gamers may have simply turned to Steam, the U.S.-based digital distribution platform, which has somehow evaded being blocked by state firewalls so far. It’s so popular in China (with an estimated 30 million users) that recently announced efforts to launch an officially-approved, censor-compliant version that is widely expected to have a slimmer selection of games resulted in online outrage.
In a separate report, the Post wrote that the nine-month hiatus may have been less an attempt to curb the gaming industry than the result of a vacancy created when State Administration of Press and Publication head Zhuang Rongwen was promoted to the Cyberspace Administration of China, the country’s internet censorship agency.