China freezes game approvals amid shakeup of regulatory agency
CHINA’S regulators have frozen approval of game licenses amid a government shake-up, according to people familiar with the matter, throwing the world’s biggest gaming market into disarray.
The halt follows a restructuring of power among departments, said the people, who asked not to be named because they don’t have approval to discuss the issue publicly. Regulators have also been concerned about violence and gambling in some games, according to one person. Online, mobile and console games have all been affected.
The whole sector has been rattled as gaming companies from online giant Tencent Holdings to small developers await approvals. Tencent, the country’s gaming and social media goliath, has shed more than US$ 160 billion ( RM656 billion) in market value since its January peak, while smaller players complain they are struggling to survive without new titles.
Tencent confirmed there has been a temporary suspension as its profit fell for the first time in at least a decade. It could not profit from its most popular games, including the hit PlayerUnknown’s Battlegrounds.
“At this point in time, we don’t have visibility on when exactly the official approval will start yet,” said President Martin Lau on a conference call with investors. “”We do believe it’s not a matter of whether these games will be approved for monetisation, but a matter of when.”
China has one of the world’s most stringent approval processes for video games, an extension of Beijing’s obsession with maintaining control over online content so it can root out dissent and other ideas it considers undesirable, from sex to graphic violence.
“For new game approvals, there will continue to be a drag,” said Alicia Yap, Citigroup Global Markets’s head of panAsia internet research. “If they previously didn’t get an approval, it seems that there will continue to be a hold on that.”
With the leadership transition in the agency, bureaucrats have been reluctant to take risks or initiate new steps that could become controversial. The gaming industry regularly draws scrutiny for addiction, violence and even violating core socialist values.
Dozens of companies may be affected. Tencent and Netease Inc. are among the biggest game distributors in China, and they license titles from some of the world’s biggest developers, including Activision Blizzard and Electronic Arts in the US and Capcom in Japan. Nexon gets 45 per cent of its revenue from Tencent, according to data compiled by Bloomberg.
Japanese game makers fell sharply after Bloomberg reported the freeze. — Bloomberg