China gaming ban: licenses for new titles may resume soon, media report says, boosting Tencent and NetEase stocks

New game approvals in China could come by the end of November, a local newspaper reported, as company executives say they also expect the freeze to end soon

China has not approved any new game licenses since July, and the months-long crackdown has resulted in cancelled projects and lay-offs in the industry

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A child plays Tencent’s popular game Honour of Kings in Dezhou, Shandong province, on July 2, 2017. Gaming stocks rose on Tuesday following news that the Chinese government may soon resume approving new games for sale in the country. Photo: Reuters

Published: 10:30pm, 16 Nov 2021

China is likely to start issuing online video game licenses again in the coming weeks, following a four-month suspension, a Chinese newspaper reported on Tuesday, sending gaming stocks soaring after Beijing’s crackdown on the industry wiped billions from their valuations since August.

The National Press and Publication Administration (NPPA) will resume issuing new licences for video games by the end of November, the 21st Century Business Herald reported, citing unnamed sources. Executives at three gaming companies in China, who declined to be named because they are not authorised to speak to media, also told the South China Morning Post on Tuesday that they expect new game licenses within weeks.

Since May 2019, the NPPA has published a list at the beginning or end of each month announcing newly licensed games in China, usually including 80 to 100 titles. But the authority has not released a new list since July 22, which has rattled gaming companies in the world’s largest video games market.

Even if approvals start up again soon, though, the three executives said they expect only a small number of new licenses to make it through authorities’ highly selective approval process.

One executive said that “quality” boutique games will receive licenses ahead of big commercial titles. Another said the number of approved games will be small because authorities want to consolidate all the restrictions they now have in place.

Chinese gaming stocks soared on Tuesday. Shenzhen-listed Hubei Century Network Technologies stopped trading after shares peaked at a 20 per cent gain for the day. Hangzhou Shunwang Tech also rose more than 10 per cent. In Hong Kong, Tencent Holdings, the world’s largest gaming company by revenue, rose more than 2 per cent, while rival NetEase gained nearly 4 per cent.

In more good news for NetEase, China’s second largest gaming company said its third-quarter revenues increased 18.9 per cent to 22.2 billion yuan, up from 15.9 billion yuan in the same period last year.