On Monday, the Chinese government approved 105 domestic games, in a sign Beijing does not want to be perceived as beginning another industry-wide crackdown on the videogame industry after its introduction last week of new rules for videogame companies produced an $80 billion rout
The government gave its official approval to titles from Tencent Holdings Ltd. and NetEase Inc., the two leading game publishers in China, which had been battered by the introduction of the new rules. The approvals were designed as a demonstration that the authorities in China support the online gaming industry, according to a post on WeChat by an online gaming industry association which was republished by the official Xinhua news agency.
Fears grew that Chinese officials were about to begin a new round of crackdowns on the tech industry after the top gaming regulator National Press and Publication Administration announced there were going to be new rules which would apply to the development of new games, including a maximum cap, yet to be determined, on the spending by adult players.
In addition, rewards for frequent log-ins, and forced player-duels, as well as any content which violated national security were all expressly banned.
The NPAA had rushed during trading hours to announce that 40 imported gaming titles had been approved, after both Tencent and NetEase had seen their market value plummet by tens of billions of dollars in Hong Kong on Friday. The two company’s titles were among those approved. However investor confidence was relatively unaffected by the approvals.
Even though shortly after the release of the new restrictions, several analysts, including analysts from Citi, said that neither Tencent or NetEase should be significantly affected, it did not prevent the share prices of the companies from plummeting in the US.
The raft of new restrictions had caught industry players and investor by surprise on the final trading day before Christmas. Many immediately thought of the tech sector crackdown of 2021, when various agencies of the government suddenly began placing restrictions on various sectors from entertainment to e-commerce. Jack Ma-backed Ant Group Co, and Alibaba Group Holding Ltd. were strictly reined in as the online education industry saw profits declared illegal, savaging it.
Yang Wenfeng, a senior vice president with Shanghai-based games studio Paper Games said, “The latest events reflect the government’s desire for a larger, more diverse gaming landscape with innovative content of a higher quality but one without excessive monetization or ‘pay-to-win’ games. The government prefers publishers to earn profits through fair practices and product innovation, rather than deepening monetization strategies.”
