China puts an end to freeze on video-game licensing

After a long nine month freeze, China has approved 80 new video game titles in the first batch of licenses that were granted by the media regulator. The initial games which have been approved are mostly local, mobile tiles and do not include any of the industry giants including Tencent Holdings Ltd or Netease Inc. The notice of the approvals have been posted online by the State Administration of Press, Publication, Radio Film and Television.

The gaming industry of China generates more than $30 billion of revenue but has been affected this year after the regulators froze the approval process for the new games. This prevented the companies from making money off the hit titles that had thrown Tencent out of the revenue competition. This led to the drop in its profits in at least a decade . It also results in the wiping out of about $200 billion off its market value since January peak.

In Hong Kong, Tencent gained as much as 1.4 percent , although the company and Netease were not in the initial batch of approvals. Karen Chan an analyst with Jefferries said, “both should benefit as the dust settles”. Tencent and other companies, who could not be in the approval game, from South Korea to Japan had rallied after the official China Securities Journal reported that the regulators had reviewed and passed the initial batch of games. Deputy director of the Communist Party’s influencial propaganda department, Feng Shixin, told an industry forum that the government was preparing licenses for green-lit titles.

The suspension was sourced from the Beijing’s campaign to deal with gaming addiction and reshuffle of regulators and led to uncertainty over the Tencent’s main business. Meanwhile, Fortnite and PlayerUnknown’s Battlegrounds that remain barred from making money off the global blockbusters, is reportedly cutting its budget to compensate over the dry spell. Tencent distributes its games and titles from external studios.

Photo Credits: Techcrunch