China’s leading video gaming companies assert the industry’s contribution in terms of social value as regulatory restrictions ease

Tencent Holdings, NetEase, Perfect World, miHoYo, Lilith Games and 37Games play up industry’s contribution to promoting Chinese culture at conference
Highlighting social responsibility in their operations reflects a trend prompted by a regulatory crackdown that started in late 2021

Video gaming

Ann Caoin ShanghaiandTracy Quin Shanghai

Published: 9:03pm, 14 Feb 2023

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China’s major video gaming companies are looking to better promote the nation’s culture and uphold social values, as regulatory restrictions ease up in the industry’s largest market.

That was the consensus expressed by senior executives from Tencent Holdings, NetEase, Perfect World, miHoYo, Lilith Games and 37Games during the China Audio-Video and Digital Publishing Association’s two-day annual conference that concluded on Tuesday in Guangzhou, capital of southern Guangdong province. The association is the domestic video gaming industry’s semi-official trade body.

Their unanimous resolve to make a positive impact on society followed the grant of new video game licences for four consecutive months, including the first batch of approved imported titles in December after an 18-month pause, signalling a thaw on regulatory restrictions.

Highlighting social responsibility in their operations reflects a trend prompted by the industry crackdown that started in late 2021, according to Zhang Yi, chief executive of research firm iiMedia. “Video games were once called ‘spiritual opium’ in Chinese society, which is what every company [in the industry] wants to avoid [being repeated],” Zhang said.

“Promotion of social value among gaming companies specifically start when they reach a certain scale,” Zhang said. “That is mostly when a company’s sales reach more than 1 billion yuan [US$146 million] a year.”

Video game sales in China, however, slumped 10.3 per cent year on year to 269.5 billion yuan in 2022, marking the first drop in at least two decades, as the industry was hammered by economic headwinds, regulatory pressure and sluggish consumer demand.

Still, that decline has not discouraged China’s video gaming industry from sharpening its focus on social values.

“With the strong support of national policies and regulators, the gaming industry will surely provide broader value in more fields,” said Zhang Wei, vice-president of Tencent Interactive Entertainment Group.

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He indicated that Tencent, which runs the world’s largest video gaming business by revenue, has incorporated elements of Chinese culture into many of its mobile games, such as its bestselling title Honour of Kings, to feature “traditional culture, show contemporary style and tell Chinese stories”.

Tencent Games is already part of various conservation and restoration projects, including the Library Cave of Dunhuang and Beijing’s Central Axis, and development of a digital Great Wall of China.

At the conference in Guangzhou, NetEase senior vice-president Wang Yi said the company, the country’s second-largest video gaming enterprise, will “inject new life” to traditional Chinese culture through its games

“NetEase will better shoulder this responsibility and respond to the expectations of society,” Wang said.

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Liu Wei, co-founder and president of Genshin Impact creator miHoYo, echoed the same goals, pointing out the Shanghai-based company’s work in integrating traditional Chinese culture into its flagship game. Genshin Impact recorded US$4 billion in global revenue last year.

“miHoYo uses intellectual property to interpret traditional culture and innovate,” Liu said. “All of miHoYo’s technical accumulation in the past few years forms part of an effort to realise the industrialisation of cultural products.”

Genshin Impact, for example, has integrated local scenery like mountains and rivers from Chinese cities such as Guilin and Zhangjiajie into Liyue, one of the seven regions in the world of the game.

“When a player understands all the cultural elements hidden in the details of the game, whether he is foreigner or Chinese, he would recognise Chinese culture,” Liu said.

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Even with the industry crackdown, China’s video gaming industry has continued to assert its contribution to society.

“The social responsibility index of China’s video gaming industry has maintained an upwards trend for many years, and its performance has also continued to improve,” said Peng Jingcheng, an analyst at market research firm Frost & Sullivan.

The primary areas covered by that index include the protection of minors, improved employment and public welfare activities. But there is still room for further improvement, Peng said.

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