China resumes video game approvals after a nine-month regulatory freeze

After several months of uncertainty, an official at the Chinese Communist Party’s propaganda department recently confirmed the new regulator has completed reviews on the first batch of games – but two of China’s largest publishers, Tencent and NetEase, are notably missing from the list of 80 recently approved licenses.

Analysts Niko Partners report that 67 mobile games, six PC titles, and one console game gained recent approval and will shortly receive permission to publish and run their games in China, ending the nine-month freeze (thanks, GI.biz).

"The first batch of games have been reviewed," said Feng Shixin, deputy head of the State Administration of Press and Publications (SAPP), which was formed specifically to monitor video game licenses. "We will hurry up to issue licences. There is a big stockpile of games for review, so it takes a while. We will continue to work hard. [We] hope everyone can be patient."

As a result of the resumption of approvals, Chinese games firms have seen their shares rise, with Seeking Alpha reporting Tencent’s shares have risen by as much as 4.6 per cent, and NetEase’s by 6.9 per cent.

Tencent reportedly cut its marketing budget following a market slowdown driven by the regulatory disruption in China. While still a "strongly profitable" company, analysts projected the Chinese company’s "total debt has soared to a record $26 billion", and expects the company will reveal its slowest growth in more than three years when it reports on its third-quarter earnings.

Tencent recently announced it will be restructuring for the first time in six years following the challenges dealing with Chinese governmental regulations for the gaming industry. The megacorp was hit with a fall in profits for the first time in 13 years owing to the very same Chinese regulatory issues that have pushed the decision to restructure.

Tencent also recently confirmed it will expand its player identity verification processes across all its games by the end of 2019 after governmental pressure to reduce game addiction, minimise underage players, and curtail short-sightedness. The new legislation, introduced in August, has made it increasingly difficult for Tencent – which, by sales, is the world’s biggest game company – to release new titles or include microtransactions or in-app purchases. Its last release was back in March, pushing its share price down by 28 per cent and reducing the company’s market value by $138 billion.