China approves new online games as crackdown eases
Chinese regulators have approved new online games for the first time in nine months, in early signs that the government is easing its crackdown on the booming sector.
China’s biggest tech companies, including gaming giant Tencent, have come under intense regulatory scrutiny over the past two years as the Communist Party seeks to overhaul the private sector, a move that has seen billions of dollars erased from their collective market value.
China’s wealthiest entrepreneurs and big business have been targeted under a policy called “common prosperity,” which ostensibly aimed to expand opportunities and living conditions for the country’s middle classes. Besides games, other targeted industries included fintech, education and entertainment.
Authorities suspended approvals for new games in July last year, fearing children nationwide were addicted to online titles that undermined Communist Party values.
A month later, Chinese children were banned from playing video games for more than three hours a week, further hitting vendors such as NetEase and Tencent and slowing revenue growth. Also in August, state media briefly blasted the game as a form of “spiritual opium.”
The restrictions have limited the ambitions of foreign game companies, including Roblox, which sought to break into China’s market of 720 million players last year with its platform, which is popular with tweens.
China’s National Press and Publication Administration released a list of 45 games on Monday that it said were approved last Friday. No Tencent games were on the list but one called Jinji of Tuzi from Baidu, the Chinese search giant, was included.
The game’s approvals come as Chinese security regulators issued a statement that they would “support the healthy development of the [financial] market” in an effort to calm investors spooked by the impact of the Omicron outbreak in the country.
The report led Monday to premarket gains for U.S.-listed Chinese gaming stocks. Nasdaq-listed shares of Bilibili rose more than 8% premarket, while NetEase jumped nearly 8%.
The National Administration of Press and Publication, in charge of video game licensing in China, last approved video games on July 22 last year. There was a similar nine-month break in approvals in 2018.
While Tencent said reliance on young people was limited, its executives said revenue growth was impacted by the process of complying with China’s gaming edicts and restricting minors’ access to gaming. his titles.
The company had previously tried to get ahead of regulators by tightening restrictions on how long minors could play its online games and rolling out facial recognition technology to prevent young people from playing too long.
Tencent said this year it expects new regulations in the future, but predicted the pace of new rules introduced over the past two years would begin to slow.