Page 284 - 2023 White Paper on the Business Environment in China
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3 White Paper on the Business Environment in China
dramatically, while the metaverse may trigger mandatory for video games to be published and
a new wave of digitalization. The report noted sold in the Chinese market. Beijing has stepped
that technological and commercial innovations up its scrutiny of the once-booming sector in
have incrementally contributed to a burgeoning recent years, cracking down on content deemed
metaverse and corresponding industry ecosystem. harmful and introducing measures to protect the
Digital collections, virtual humans and virtual worlds health of minors and prevent gaming addiction.
have become the three most important segments In 2021, the government limited the game time
in the metaverse in China. Tech heavyweights are for players aged under 18 to three hours a week,
leading the development of metaverse in China, some of the strongest measures seen globally. In
while startups have also joined the market. To addition, China suspended license approvals for
seize the strategic opportunities arising from the video games for eight consecutive months until
metaverse and emerging technology, companies April 2022, when it approved 45 titles. It issued 60
will need to assess a range of considerations such licenses in June, 67 in July and 69 in August. There
as business models, development strategies and have been signs of an impending relaxation, with
tax planning (Feifei). the People’s Daily publishing an opinion article
saying that video games had become an industry of
China’s top two video gaming companies, great significance to the country’s industrial layout
Tencent Holdings and NetEase, were both among and technological innovation (Pan).
the winners of new licenses issued in November
2022, according to the latest list published by There are new rules for moderating online
China’s video gaming regulator, signaling China is content. The new rules demand platform operators
lessening restrictions on the sector. The National to employ a content moderation team that
Press and Publication Administration (NPPA), the “matches the scale of their service”, and to improve
agency responsible for licensing video games in the professional quality of staff responsible for
China, approved 70 licenses for Chinese video reviewing content, according to a document
gaming publishers in November, the second released by the Cyberspace Administration of
highest number in 2022 behind the 73 issued in China (CAC). The regulation would tighten existing
September. The regulator did not grant any new rules, launched in 2017, that mandated companies
licenses in October. Tencent Holdings, the world’s to review user comments only under news content.
largest video game company by revenue, won The proposed rules also specify the punishment
a gaming license for its video game Meta Slug: associated with violations: operators that fail
Awakening. In September, Tencent obtained a to observe the regulation face warnings, fines,
license via a subsidiary, ending a 15-month drought and suspension of their commenting features or
for approvals of new titles amid China’s crackdown even the entire service. The previous regulation
on video game industry. NetEase, whose 14-year only stated that “relevant authorities would take
partnership with Blizzard in China is ending, also actions on service providers that violate the rules,
won a license in the latest batch of approvals for in accordance with relevant laws and regulations.”
its new title Monkey King’s Odyssey: Returning. In line with the existing rules, the draft stipulates
NetEase said that the termination of its deal with that social media users should register with their
Blizzard, which is set to expire on January 23, 2023, real identities before leaving comments. It also
would have no “material impact” on its results as says that users who violate the rules may be
the affected games “represent low single digits as warned, barred from commenting, asked to delete
a percentage of” its total revenues and income. their comments, or have their account suspended
Beijing’s license approvals for Tencent and NetEase or deactivated. Rules prohibiting the use of bots or
come as China’s gaming market has started to human commenters to “spread information that
shrink. Total sales in the Chinese video gaming disturbs the normal order and misleads public
market declined to 59.7 billion RMB (US$8.23 opinion” remain unchanged, as are provisions
billion) between July and September, down 19.1 that say users should be “blacklisted for serious
% from 73.8 billion RMB in the same period in breaches of rules” and “banned from accessing
2021, according to a report by Chinese video the service or opening new accounts.” The draft
gaming intelligence firm CNG. Gaming licenses are measures are part of China’s approach in censoring
284
dramatically, while the metaverse may trigger mandatory for video games to be published and
a new wave of digitalization. The report noted sold in the Chinese market. Beijing has stepped
that technological and commercial innovations up its scrutiny of the once-booming sector in
have incrementally contributed to a burgeoning recent years, cracking down on content deemed
metaverse and corresponding industry ecosystem. harmful and introducing measures to protect the
Digital collections, virtual humans and virtual worlds health of minors and prevent gaming addiction.
have become the three most important segments In 2021, the government limited the game time
in the metaverse in China. Tech heavyweights are for players aged under 18 to three hours a week,
leading the development of metaverse in China, some of the strongest measures seen globally. In
while startups have also joined the market. To addition, China suspended license approvals for
seize the strategic opportunities arising from the video games for eight consecutive months until
metaverse and emerging technology, companies April 2022, when it approved 45 titles. It issued 60
will need to assess a range of considerations such licenses in June, 67 in July and 69 in August. There
as business models, development strategies and have been signs of an impending relaxation, with
tax planning (Feifei). the People’s Daily publishing an opinion article
saying that video games had become an industry of
China’s top two video gaming companies, great significance to the country’s industrial layout
Tencent Holdings and NetEase, were both among and technological innovation (Pan).
the winners of new licenses issued in November
2022, according to the latest list published by There are new rules for moderating online
China’s video gaming regulator, signaling China is content. The new rules demand platform operators
lessening restrictions on the sector. The National to employ a content moderation team that
Press and Publication Administration (NPPA), the “matches the scale of their service”, and to improve
agency responsible for licensing video games in the professional quality of staff responsible for
China, approved 70 licenses for Chinese video reviewing content, according to a document
gaming publishers in November, the second released by the Cyberspace Administration of
highest number in 2022 behind the 73 issued in China (CAC). The regulation would tighten existing
September. The regulator did not grant any new rules, launched in 2017, that mandated companies
licenses in October. Tencent Holdings, the world’s to review user comments only under news content.
largest video game company by revenue, won The proposed rules also specify the punishment
a gaming license for its video game Meta Slug: associated with violations: operators that fail
Awakening. In September, Tencent obtained a to observe the regulation face warnings, fines,
license via a subsidiary, ending a 15-month drought and suspension of their commenting features or
for approvals of new titles amid China’s crackdown even the entire service. The previous regulation
on video game industry. NetEase, whose 14-year only stated that “relevant authorities would take
partnership with Blizzard in China is ending, also actions on service providers that violate the rules,
won a license in the latest batch of approvals for in accordance with relevant laws and regulations.”
its new title Monkey King’s Odyssey: Returning. In line with the existing rules, the draft stipulates
NetEase said that the termination of its deal with that social media users should register with their
Blizzard, which is set to expire on January 23, 2023, real identities before leaving comments. It also
would have no “material impact” on its results as says that users who violate the rules may be
the affected games “represent low single digits as warned, barred from commenting, asked to delete
a percentage of” its total revenues and income. their comments, or have their account suspended
Beijing’s license approvals for Tencent and NetEase or deactivated. Rules prohibiting the use of bots or
come as China’s gaming market has started to human commenters to “spread information that
shrink. Total sales in the Chinese video gaming disturbs the normal order and misleads public
market declined to 59.7 billion RMB (US$8.23 opinion” remain unchanged, as are provisions
billion) between July and September, down 19.1 that say users should be “blacklisted for serious
% from 73.8 billion RMB in the same period in breaches of rules” and “banned from accessing
2021, according to a report by Chinese video the service or opening new accounts.” The draft
gaming intelligence firm CNG. Gaming licenses are measures are part of China’s approach in censoring
284
