China gaming crackdown: increased speculation over extended freeze on new video game approvals weighs heavily on industry

Beijing’s lack of guidance on the resumption of new video game approvals is fuelling speculation of an extended licensing freeze, which could lead to increased market volatility for Chinese gaming stocks, more job cuts in the industry and a greater push by affected companies to expand into overseas markets.

The National Press and Publication Administration (NPPA), which is in charge of licensing video games in China, has not published a list of approved new titles since the end of July. The licensing process has now been in limbo for about seven months, marking the longest freeze in approvals since a nine-month regulatory hiatus in 2018.

Chinese video gaming stocks have been hit hard by the uncertainty. Shares of Tencent Holdings, NetEase and Bilibili slumped in Hong Kong on Monday and the rout extended into Tuesday amid increased speculation that the suspension of new game approvals will be extended. Shares of Tencent, which runs the world’s biggest video gaming business by revenue, declined 0.1 per cent on Tuesday after suffering a 5.2 per cent beating on Monday.

The slowdown in approvals for new games forms part of Beijing’s measures to tackle gaming addiction among young people, according to a South China Morning Post report in September, citing people with knowledge of the matter.