The video games industry within China has been thrown into turmoil as it comes to light new game licenses have not been approved for months. Billions have been knocked of the market value of Chinese media giants such as Tencent with no clear end in sight.
China’s billion-strong population loves to game which is why it comes as no surprise China is the world’s largest gaming market valued at $37.9 billion. But there’s a big problem we are only now learning about: the Chinese government has stopped approving new game licenses, and it hasn’t done so for months.
As Bloomberg reports, there’s is currently a “restructuring of power” among the different departments of the government in China. It has resulted in new game licenses being frozen until the restructuring is complete. In the past, two departments have handled game licensing: the National Radio and Television Administration (NRTA) and the Ministry of Culture and Tourism (MCT).
The NRTA hasn’t granted any new game licenses for four months while the MCT is thought to have greatly enhanced the requirements for obtaining a license, so there’s far fewer of them being issued. It seems unlikely this situation will change any time soon as those in leadership positions are very reluctant to show any initiative and take what they see as unnecessary risks sorting out the problem and implementing new policies.
The knock-on effect is a huge devaluation of some of China’s biggest media companies. For example, Tencent’s market value has fallen more than $150 billion since January. Western companies are not immune, either. China insists on foreign companies working with a Chinese partner to sell their products, meaning many US and European publishers work with companies such as Tencent to sell games. Activision Blizzard, EA, Capcom, and Nexon are just a few of the affected publishers/developers.
It doesn’t help that gaming is viewed negatively by those in power within China. We regularly see stories appearing regarding gaming and tech addiction, violence, and even a few deaths from playing for too long without a break. Why would any government officials want to help release more games with that in mind?
It is thought that, even if everything went back to normal this week in terms of approvals, the delays would last another three months as the approval process gets back up to speed. So in the best case scenario it will still be December before new games start appearing regularly.