Chinese internet giant tencent It has been excluded from the first batch of video game license approvals issued by the state government since March.
China’s regulators approved the launch of 80 online video games on Saturday after a month-long freeze, Reuters reported for the first time. None of the approved titles listed on the approvals list were from Tencent Holdings, the world’s largest gaming company.
Licenses are generally granted on a first-come, first-served basis when studios archive their apps, various game developers told TechCrunch. There are at least 7,000 titles on the waiting list, of which only 3,000 can receive official licenses in 2019, according to experts from China’s 21st Century Business Herald. Given the slim chance of making it to the first batch, it’s not surprising that the country’s two largest game publishers, Tencent and NetEase, were absent.
The controlled and gradual thawing process is in line with a senior official’s announcement on December 21. While the Chinese gaming regulator is doing its best to green-light the titles as soon as possible, there are a large number of applications pending, the official said. Without licenses, studios cannot legally monetize their degrees in China. The approval hiatus has reduced earnings in the world’s largest gaming market, which posted 5.4 percent year-on-year growth in the first half of 2018, the slowest rate in the last ten years, according to a report by the Beijing-based research firm. GPC and the official gaming association of China, CNG.
Tencent is best known as the company behind WeChat, A popular messaging platform in China. But much of its income comes from games. Even with a recent decline in gaming revenue, the company has a thriving business that is majority-owned by several companies, including Activision, Grinding Gears Games, Riot, and Supercell. In 2012, the company took a 40 percent stake in Epic Games, maker of Fortnite. Tencent also has alliances or publishing agreements with other video game companies such as Square Enix, makers of Tomb Raider.
The ban on new video game titles in China has affected Tencent’s results. The company reported that gaming revenue fell 4 percent in the third quarter due to the extended license freeze. At the time, Tencent claimed that it had 15 games with monetization approval in the pipeline. To combat pressure on its consumer-oriented gaming business, the Chinese giant launched a major shakeup in October to focus more on company-related initiatives such as cloud services and maps. Founder and CEO Pony Ma said at the time that the strategic repositioning would prepare Tencent for the next 20 years of operation.
“In the second stage, we aspire to enable our partners in different industries to better connect with consumers through an expanding, open and connected ecosystem,” said Ma.
China tightened restrictions in 2018 to combat games that are considered illegal, immoral, low-quality or have a negative social impact, such as those that make children addicted or myopic. This means that studios, regardless of size, must weigh the new guidelines in their production and interaction with the user. Tencent placed its own restrictions on games in what appeared to be an attempt to reassure regulators. The company has expanded its age verification system, an effort aimed at curbing the use of young players, and has set limits on daily play.
Update (December 30, 10:00 am, GMT + 8): Adds context to China’s gaming industry and Tencent.