In a move indicating a potential shift in policy, China approved 105 domestic games on Monday, signalling a softening stance after a recent tightening of industry restrictions resulted in an $80 billion market value loss last week, Bloomberg reported.
Notably, the approved titles include games operated by Tencent Holdings Ltd. and NetEase Inc., China’s leading game publishers that were significantly impacted by Beijing’s stringent regulations.
The approvals underscore the Chinese authorities’ apparent support for the development of the online gaming sector, as mentioned by an industry association in a WeChat post republished by the official Xinhua news agency.
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The recent approvals come on the heels of a Friday announcement by the National Press and Publication Administration (NPPA), signalling new rules to limit the development of online games in China.
These rules include an unspecified cap on spending by adult players, a ban on rewards for frequent logins, forced player-duels, and a prohibition on content violating national security.
The announcement triggered a market reaction, causing Tencent and NetEase’s market value to plunge by tens of billions of dollars in Hong Kong.
Despite the NPPA’s subsequent approval of 40 imported gaming titles during trading hours on Friday, investor confidence remained subdued.
Industry analysts, including those from Citi, initially suggested that Tencent and NetEase might not be significantly affected by the new restrictions. However, the shares of both companies experienced a decline in US trading.
The NPPA, responding to the market concerns, stated on Saturday that it would consider feedback from stakeholders, including companies and players, to enhance the rules.
The sudden and sweeping restrictions have reminded many of the tech-sector crackdown in 2021, where various agencies imposed abrupt curbs on sectors ranging from e-commerce to entertainment, impacting companies like Ant Group Co. and Alibaba Group Holding Ltd.
Bloomberg cited Yang Wenfeng, a senior vice president with Shanghai-based games studio Paper Games, who provided insight into the government’s perspective, stating, “The latest events reflect the government’s desire for a larger, more diverse gaming landscape with innovative content of higher quality but one without excessive monetisation or ‘pay-to-win’ games.”
He added, “The government prefers publishers to earn profits through fair practices and product innovation, rather than deepening monetisation strategies.”
(With inputs from Bloomberg)
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