Tencent, NetEase get new video game licences after nine-month freeze, clearing cloud of uncertainty
- The State Administration of Press and Publications has now approved a total of 352 new game titles since March last year
Tencent Holdings and NetEase, which run China’s two biggest video game operations, received their first new game licences after a nine-month freeze by Chinese regulators, removing the cloud of uncertainty over these firms’ main revenue source.
The State Administration of Press and Publications (SAPP) on Thursday published a list of 95 approved titles that it reviewed on January 13, marking the fourth round of game approvals since the government resumed granting new licences in December.
Tencent, NetEase and Perfect World Games missed out on the first three rounds of new approvals, which tend to be granted in the order games are received for review. The SAPP has now approved a total of 352 new titles since March last year amid a government restructuring.
The new game licences are likely to ease market concerns over Tencent and NetEase, which both count video games as their largest revenue contributor.
“We expect a more meaningful pickup in the monthly game approval number after the Lunar New Year [holiday] and the National People’s Congress in March, putting a 2,000 to 3,000 annual license issuance largely on track,” said Jefferies analyst Karen Chan in a report on Thursday.
Tencent and NetEase did not immediately respond to requests for comment. Beijing-based Perfect World said it does not have further information to share.
The gaming approval hiatus and crackdown on content had taken a toll on the industry, which saw its slowest revenue growth in at least a decade. Billions of dollars in market value were wiped off major players like Hong Kong-listed Tencent and Nasdaq-traded NetEase.
Publishers in China are required to submit games for review to authorities before they can be sold in the domestic market. That process, however, was suspended since March. The SAPP – formed in April as part of a broader government shake-up – announced in December the resumption of the games approval process.
Chinese authorities had earlier expressed concern over violent games and gaming addiction among minors, with the education ministry stating that it would “implement regulations and controls” on online games, explore an age-restriction system and reduce gameplay time by minors.
In response, Tencent announced in October the use of facial recognition technology to detect minors playing its games. It also made age-verification mandatory to those who log into its blockbuster mobile game Honour of Kings, which limits playing time for minors.
Tencent on Thursday received licences for two lesser-known functional mobile games, which lets users design wood furniture and Chinese traditional folding fans.
The Shenzhen-based internet giant is still waiting approval on two international blockbuster survival shooter games, Fortnite and PlayerUnknown's BattleGround (PUBG).
While Tencent has attracted millions of players for two mobile remakes of PUBG and a desktop version of Fortnite via domestic trial runs, the company still needs licences to monetise these free-to-play titles through in-game purchases, like character skins.
NetEase obtained a licence for role-playing mobile game War Spring and Autumn.
The biggest name among the latest batch of game approvals was for the mobile adaptation of Perfect World’s namesake, decade-old franchise martial arts online game. Tencent has exclusive rights to publish Perfect World Mobile from China’s No 3 video games company.