Page 7 - The South China Business Journal
P. 7
gaming industry. NPPA’s first task was to ・Foreign businesses having a hard time in
temporarily suspend the country’s approval process China’s gaming market
for new games entering the market, while working
to improve it. The freeze lasted nine months, According to industry observers, although China
between April and December of the same year. The has resumed the approval of gaming licenses, the
Ministry of Education then issued a notice to the country’s rigorous regulatory environment and
NPPA, requesting stronger regulations to limit the content filtering mechanism make it difficult for
amount of time minors could spend playing online the world’s largest gaming market to be the most
games and the implementation of an age-rating welcoming to international creators.
system. These combined actions eventually limited
the number of new games approved for distribution Although the NPPA reopened approvals for
each month. domestic games this month, it is still closed to
foreign firms. Before the ban, the NPPA cleared 76
The NPPA resumed game approvals in December imported games in 2021. Even so, this was a lower
2018, clearing the first round of Chinese games number than the 97 approved in 2020.
within the same month, while foreign ones had to
wait until April 2019 for assessment. To put things While some big international studios are still hoping
into perspective, throughout the same month, NPPA for a breakthrough in China, others have given up.
approved 999 domestic games and only 30 from South Korea’s largest video game company and
overseas. The government clarified the renewed creator of ‘Dungeon & Fighter’, Nexon, for example,
importance of game content, given the widespread has postponed the release of the game’s mobile
“lack of originality, culture, social responsibility, and edition in China after some content failed to meet
a misdirection of values”. Further new rules issued Chinese government rules. The company continues
included real-name registration for online gaming, to work on the mobile game alongside Chinese local
a curfew for online gamers under the age of 18, and distributor and tech giant Tencent Holdings, yet no
spending limits. one knows when or if it will be approved.
・Recent developments ・Chinese gaming firms target global
markets
In 2021, China’s gaming market became the largest
worldwide, with a revenue of RMB 296.5 billion Industry watchers point out another trend –
(US$46.6 billion). Chinese gaming businesses are looking for
opportunities abroad.
Around the closing time of the Beijing Winter
Olympics, news circulated about a widening By aiming to expand internationally, Chinese
crackdown in the gaming industry, leading to a companies may be able to alleviate some of the
significant decrease in Tencent and Alibaba’s market mounting pressures of local laws. The trend has
value. The lack of clarity from Beijing on when fresh been rising proportionally to the tightening of
video game approvals would resume, fueled even domestic regulations, especially since the number
more conjecture about a protracted license block.
Overall, approvals have decreased considerably
since 2019, with concessions to foreign companies
becoming particularly rare. Domestic firms, such as
Tencent and NetEase, have also been called upon
by regulatory authorities to discuss their ‘profit-
making activities.
Notwithstanding the recent resumption of approval,
the government’s tight control and arbitrary ban
could result in market instability and job losses for
Chinese gaming companies. According to the Red
Star Capital Bureau, companies like NetEase, Baidu,
Lilith, IGG, and Perfect World have all been forced
to cut some initiatives. Restrictions make life even
more unsustainable for smaller entities. According
to recent reports, over 14,000 small studios and
gaming-related businesses closed doors in 2021.
SOUTH CHINA BUSINESS JOURNAL 4
temporarily suspend the country’s approval process China’s gaming market
for new games entering the market, while working
to improve it. The freeze lasted nine months, According to industry observers, although China
between April and December of the same year. The has resumed the approval of gaming licenses, the
Ministry of Education then issued a notice to the country’s rigorous regulatory environment and
NPPA, requesting stronger regulations to limit the content filtering mechanism make it difficult for
amount of time minors could spend playing online the world’s largest gaming market to be the most
games and the implementation of an age-rating welcoming to international creators.
system. These combined actions eventually limited
the number of new games approved for distribution Although the NPPA reopened approvals for
each month. domestic games this month, it is still closed to
foreign firms. Before the ban, the NPPA cleared 76
The NPPA resumed game approvals in December imported games in 2021. Even so, this was a lower
2018, clearing the first round of Chinese games number than the 97 approved in 2020.
within the same month, while foreign ones had to
wait until April 2019 for assessment. To put things While some big international studios are still hoping
into perspective, throughout the same month, NPPA for a breakthrough in China, others have given up.
approved 999 domestic games and only 30 from South Korea’s largest video game company and
overseas. The government clarified the renewed creator of ‘Dungeon & Fighter’, Nexon, for example,
importance of game content, given the widespread has postponed the release of the game’s mobile
“lack of originality, culture, social responsibility, and edition in China after some content failed to meet
a misdirection of values”. Further new rules issued Chinese government rules. The company continues
included real-name registration for online gaming, to work on the mobile game alongside Chinese local
a curfew for online gamers under the age of 18, and distributor and tech giant Tencent Holdings, yet no
spending limits. one knows when or if it will be approved.
・Recent developments ・Chinese gaming firms target global
markets
In 2021, China’s gaming market became the largest
worldwide, with a revenue of RMB 296.5 billion Industry watchers point out another trend –
(US$46.6 billion). Chinese gaming businesses are looking for
opportunities abroad.
Around the closing time of the Beijing Winter
Olympics, news circulated about a widening By aiming to expand internationally, Chinese
crackdown in the gaming industry, leading to a companies may be able to alleviate some of the
significant decrease in Tencent and Alibaba’s market mounting pressures of local laws. The trend has
value. The lack of clarity from Beijing on when fresh been rising proportionally to the tightening of
video game approvals would resume, fueled even domestic regulations, especially since the number
more conjecture about a protracted license block.
Overall, approvals have decreased considerably
since 2019, with concessions to foreign companies
becoming particularly rare. Domestic firms, such as
Tencent and NetEase, have also been called upon
by regulatory authorities to discuss their ‘profit-
making activities.
Notwithstanding the recent resumption of approval,
the government’s tight control and arbitrary ban
could result in market instability and job losses for
Chinese gaming companies. According to the Red
Star Capital Bureau, companies like NetEase, Baidu,
Lilith, IGG, and Perfect World have all been forced
to cut some initiatives. Restrictions make life even
more unsustainable for smaller entities. According
to recent reports, over 14,000 small studios and
gaming-related businesses closed doors in 2021.
SOUTH CHINA BUSINESS JOURNAL 4
