China approves 105 video games, but Christmas miracle does not revive stocks after suggested spending curbs

The latest batch of approvals, released by the National Press and Publication Administration (NPPA) on Monday, marked the first time Beijing had approved more than 100 titles in its monthly list since July 2022, when 135 titles made the cut. On Friday, the regulator also approved 98 imported titles.

The move “strongly demonstrates authorities’ clearly supportive stance on the development of online games”, said the semi-official trade body Game Publishing Committee of the China Audio-Video and Digital Publishing Association (CADPA), in an article published on Monday to its official WeChat account.

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Among the newly approved games are Tencent Holdings’ Assault Fire: Future, and two from NetEase – Lost Light and Sifangyuzhishi.

The new list brings the tally of approved titles this year to 1,076, a drastic improvement for an industry beset by uncertainty following a sweeping crackdown two years ago. Licence approvals were frozen for the eight months from August 2021 through March 2022, resulting in just 748 titles being approved in 2021 and 512 in 2022.

CADPA said it hoped members, including giants Tencent and NetEase, would “make an effort to roll out more quality content and promote the high-quality development of the online game industry”.

The approvals are the second positive signal to the video game industry in three days, after the NPPA sought on Saturday to ease concerns about its new draft rules unveiled the previous day that sent stocks plummeting. The regulator said it would “revise and improve” the rules after “carefully studying and listening to the opinions of relevant departments, enterprises, users and other parties”.

The draft regulation, which is open for public comment until January 22, would require game developers to cap how much users can top up their accounts, and bans incentivising “excessive” gameplay by offering rewards for things like daily logins and topping up with fresh funds.

News of the regulation sent stocks spiralling, especially for China’s two largest game publishers. Tencent and NetEase closed down 12 per cent and 25 per cent in Hong Kong on Friday.

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The market continued to slump in mainland China on Monday, when 26 gaming companies lost an average of 3.3 per cent, according to financial information provider East Money. The Hong Kong bourse is closed for the Christmas holiday.

Meanwhile, the industry is still recovering from the government’s previous crackdown targeting what it perceives as video game addiction. In August 2021, Beijing issued new rules limiting the time people under 18 years old can spend playing games to between 8pm and 9pm on Fridays, Saturdays, Sundays and statutory holidays.

That was accompanied by the freeze on licences that, once resumed, saw much smaller batches of monthly approvals.

In 2022, China’s total gaming industry revenue declined 10.3 per cent year on year owing to economic headwinds, slower user growth and regulatory scrutiny, according to the CADPA.

More favourable regulations this year are expected to help increase revenue 14 per cent to 303 billion yuan (US$42.5 billion), which would mark the highest annual sales since the data became available in 2003.

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