China has approved online games again after an eight-month break.
Online game licenses have been given out for the first time in China, ending an eight-month suspension of regulatory approval. But analysts say that a more rigorous review process will be in place for the foreseeable future.
Many people were surprised when the National Press and Publication Administration came out with a list of 45 home games that had been approved by the regulator on Monday night. This surprised many people. First time in a long time that China has approved games. The government said they were going to focus on new measures to protect young people and cut down on addiction.
Market watchers thought China might even keep its online gaming ban in place until the end of the year, but the names of big companies like Tencent and NetEase were not on Monday’s list of approved games. The two big gaming companies didn’t make it into this first batch of games that were approved. The games were made by search engine operator Baidu, Shanghai-based games developer Lilith, and Shenzhen-based developer iDreamsky Technology.
As a result, Tencent shares rose by as much as 5% in Hong Kong on Tuesday. NetEase grew by 4.2%. NetEase, a company based in Hangzhou, China, said it had no comment on the government’s decision to allow online games to be played again. An email asking for comment from Tencent didn’t get a response back from the company.
There are still a lot of questions about when more titles will be approved in China, says Cui Chenyu, an analyst at the market research firm Omdia who is based in Shanghai, China. In the past, there is little doubt that the pace of regulatory approvals would slow down and fewer games would get the licenses they need.
The reason authorities want to keep telling underage kids not to play online games is because they think it’s a bad thing for them to do. He says regulators are also trying to cut down on the amount of violence in games, and they’re telling developers to add more things that show off Chinese culture in them.
Ke thinks that the regulator will only let a few books through each month from now on. Those days are long gone. China used to put out hundreds of online games each month. This year’s pace may be even slower than last year, when China approved about 80 titles a month before taking a long break from reading.
If you live in a bad situation, developers are looking for markets outside of the country. Tencent, for example, has been investing in new game studios in an effort to find promising titles that it can help distribute outside of China. A lot of money was made by playing outside of North America and Europe in the fourth quarter. This is up 34% from the same period a year ago. Revenues from domestic games grew just 1% to $4.6 billion. This was mostly due to sales of older games like Honour of Kings and League of Legends: Wild Rift.