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Video gaming

China gaming approval ‘green channel’ halted after one Communist Party official’s promotion

  • Zhuang Rongwen, head of State Administration of Press and Publication, was named to lead the Cyberspace Administration of China
  • Zhuang’s departure coincided with the halt in gaming approval via a ‘green channel’ first revealed by Tencent
PUBLISHED : Friday, 26 October, 2018, 8:32am
UPDATED : Friday, 26 October, 2018, 1:12pm

Inside the Chinese bureaucracy, one unfilled job may be putting a US$38 billion industry on edge.

Chinese regulators have shut down the last known official path for releasing new games amid a broader licensing freeze, publications including Bloomberg and The Wall Street Journal reported this week.

This so-called green channel is a workaround for a few big firms to make money off their new titles after Beijing suspended approval of new games since the end of March.

Its existence was first revealed publicly by Tencent president Martin Lau during a conference call in August. Lau said the special process allowed publishers to apply for games to be distributed and monetised for a month-long testing, acting as a “relief for the entire industry.”

Industry speculation was rife that his comments angered the authorities, who promptly shut down the channel, closing off the last avenue for profit for the burgeoning gaming industry.

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But a more mundane reason might be behind the halt in approvals. Niko Partners, a research firm that specialises in the gaming industry, suggested the suspension might be related to a top gaming regulator being promoted and leaving his position in August, the same month that Lau made his comment on the green channel. In the report, the analysts cited games publisher sources for the information.

“Game publishers are now in the same position they were in before the temporary approval process was introduced. [They] will not be able to have new games approved until the SAPP carries out reforms and begins issuing licences again,” Niko wrote in a blog post published on Wednesday, referring to the newly minted State Administration of Press and Publication, which is in charge of game licensing among other things.

The SAPP was formed in April amid a massive government shake-up and falls under the Communist Party’s propaganda department. It was headed by Zhuang Rongwen, who left the post in August after being named as the new chief of the Cyberspace Administration of China (CAC), the country’s top internet censor.

Zhuang, 57, who earlier worked under Chinese president Xi Jinping in the southern province of Fujian, is rising quickly in the official hierarchy. The CAC’s former chief, Lu Wei, was widely seen as the public face of China’s draconian control over the internet during his term until 2016, and pleaded guilty to taking bribes of 32 million yuan (US$4.6 million), according to provincial court authorities.

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The SAPP has yet to announce its new head. “The vacancy appears to be one of the primary roadblocks to resuming game licensing,” said Niko analysts. “It is still unclear as to when the SAPP will complete reforms and restart its mission.”

The halt on new game approvals is expected to extend to as late as February, pending the finalisation of the new licensing system, a government source told the Post previously.

The gaming freeze, along with the closure of the temporary green channel due to personnel change, highlights the uncertainties that businesses have to stomach to operate in China.

Beijing has sought to rein in the gaming industry this year, amid concerns over internet addiction, childhood myopia and unsuitable content. The hiatus on license approvals is in large part to be blamed for the industry’s slowest growth in at least a decade in the first half. It also helped knock over US$200 billion in market value off Tencent, the world’s top grossing games publisher last year.

Against this backdrop, Chinese game developers have ramped up efforts to publish their new titles overseas, while some independent labels have sought to reach domestic audience via US games distribution platform Steam, which has an estimated 30 million users in China. While Steam has yet to officially launch in China, it is not blocked in the country either.