China gaming crackdown: licensing freeze is over but analysts say regulatory risks remain

China ended its eight-month freeze on new video game licences on Monday, bringing hope to an industry that has been assailed for inappropriate content and for encouraging addiction among players.

But analysts have warned that those hoping for a return to the days when around 100 new games were approved every month will likely be disappointed amid a tough new regulatory environment.

For a start, none of the newly-approved batch of 45 games by the National Press and Publication Administration (NPPA) belong to Tencent Holdings or NetEase – the country’s two biggest video games producers. Most of the titles belong to relatively small gaming developers, including Baidu, XD.com, Lilith Games and 37Games.

And the list of new games is significantly shorter than it used to be. There were 87 titles approved when the last list was published on July 22, 2021. In the first seven months of 2021 – prior to suspension – the regulator approved 679 titles, or 97 per month.

So despite the huge backlog since July 22, the regulator has not shown any sign that it is about to open the floodgates.

You Haokun, a senior analyst at research firm LeadLeo, said the small size of new approvals and the absence of big gaming houses shows that Beijing remains cautious about greenlighting new video games for the world’s largest gaming market. However, he still expects game approvals to climb in coming months.