China to freeze game approvals amid agency shake-up

HONG KONG: 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 Ltd to small developers await approvals.

Tencent, the country’s gaming and social media goliath, has shed more than US$150bil in market value since its January peak, while smaller players complain they are struggling to survive without new titles.

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.

But its massive smartphone and web population also makes it the world’s largest gaming market with an estimated US$37.9bil in revenue, according to research by Newzoo.

“For new game approvals, there will continue to be a drag,” said Alicia Yap, Citigroup Global Markets’s head of pan-Asia internet research. “If they previously didn’t get an approval, it seems that there will continue to be a hold on that.”

Jane Yip, a spokeswoman for Tencent, declined to comment on game approvals. The ministries didn’t immediately respond to faxed requests for comment.

While certain companies have disclosed delays in getting approval for their games, the industrywide freeze has not been made public before.

Two departments oversee the process. The National Radio and Television Administration has not granted licenses for about four months, while the Ministry of Culture and Tourism has made game registration procedures more stringent, the people said. Both agencies have gone through personnel changes and restructurings of responsibilities following a shake-up earlier this year as President Xi Jinping consolidated power. With the leadership transition, 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.— Bloomberg