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People play games in the video gaming centre in Shanghai, China, 31 August 2021. Photo: EPA-EFE

China’s video gaming crackdown: 2021 revenue growth slows sharply amid teenage play limits and new licence suspensions

  • Industry’s gross sales revenue grew 6.4 per cent in 2021 from a year ago, a sharp reduction from last year’s 20.7 per cent growth, according to report
  • Slower growth comes after Chinese regulators implemented teenage play limits and froze new game licence approvals in August
Video gaming

China’s video games market had its slowest revenue growth in three years in 2021 amid Beijing’s crackdown on the industry while the number of players stagnated, according to an industry report released on Thursday.

According to the report released by the Game Publishing Committee (GPC) of the China Audio-Video and Digital Publishing Association, China’s state-backed gaming industry association, the industry’s gross sales revenue grew 6.4 per cent in 2021 from a year ago, a sharp reduction from last year’s 20.7 per cent growth.

The number of gamers in China also plateaued, with the number of gamers rising by just 0.22 per cent to 66.6 million gamers this year compared with growth of 3.7 per cent in 2020, according to the report. The GPC report was released at the annual China Game Industry Annual Conference, attended by regulators and company representatives.

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The significantly slower growth comes after Chinese regulators moved to ban teenagers under 18 from playing video games for more than three hours a week in August, which came with a licence freeze for new video games in the country around the same time. Beijing signalled it wants to prevent gaming addiction and promote positive content among the nation’s youth.

Total revenue in China’s gaming market – the world’s biggest – reached 296.5 billion yuan (US$46.6 billion) in 2021, with Tencent Holdings, NetEase and ByteDance all jostling for a slice of the pie. But the sales growth rate in 2021 was the slowest since 2018, when regulators froze new game licence approvals for nine months.

It remains uncertain how much longer the video games industry will remain in Beijing’s cross hairs, with some industry analysts predicting a more hands-off approach in 2022 now that the regulatory framework has been tightened. However, in recent months regulators have gone after companies for not implementing tighter restrictions to deal with children who seek to bypass adult identification mechanisms for games.

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At the conference, Yang Fang, deputy director of the publishing bureau under the Central Propaganda Department, the agency in charge of granting licences, said that it is working to purge non-licensed games and eradicate practices where game publishers change a game’s content after obtaining a licence from the authority.

Yang said that the government wants to prevent “the disorderly expansion and the barbaric growth of capital”, in a warning shot against rampant merger and acquisition activity in the sector. She added that China will launch a campaign to boost “positive energy” in games next year to encourage the growth of local games with “good themes, superior ideas and good production quality”.

Beijing has made it increasingly clear in recent years that video games need to reflect Chinese values. In September, regulators convened a meeting with many game companies in the country, reminding them that video games are no longer apolitical “pure entertainment” but a new form of art that must highlight “a correct set of values” and accurate understanding of China’s history and culture.