China's Regulators Halt Approval of New Games

Amidst an ongoing government shake up, China's content regulators have inadvertently put the approval of new games on indefinite hold until further notice. Home to what is the biggest market in the gaming industry, China's freeze on new games is not only affecting local industry players, but causing headaches for overseas publishers as well.

While there has been no official announcement made regarding the situation from the Chinese government, the restructuring of personnel within the departments comes hot on the heels of Xi Jinping's recent election. The two bodies overseeing the approval process of new game titles are allegedly still undergoing reform, with the National Radio and Television Administration having not granted any new licenses in the past four months, while the Ministry of Culture and Tourism is increasing its scrutiny across registration processes.

Smaller companies have no doubt been struggling as they have been unable to release new content, but even the tech giant Tencent has not been immune to the effects of this continued delay.

Tencent confirmed there has been a temporary suspension as it reported earnings Wednesday. Its profit fell for the first time in at least a decade, results it said were due in part to its inability to profit from its most popular games, including the hit PlayerUnknown’s Battlegrounds.

“At this point in time, we don’t have visibility on when exactly the official approval will start yet,” said President Martin Lau on a conference call with investors. “"We do believe it’s not a matter of whether these games will be approved for monetization, but a matter of when.”

Overseas publishers that have a vested interest in the Chinese market are also feeling the effects of the moratorium on new titles. Nexon, Konami and Capcom are some of the many companies that are taking a hit on the stock market after Tencent had made its announcement regarding the government freeze on approvals and weak profits from its earning reports.

If and when the freeze will be over, there will still be some time before China will be seeing new games in its market. The "typical [approval] process takes about two to three months", and with the increasing scrutiny from regulators on online gambling and gaming addiction, as well as the current backlog of titles waiting to be approved, gaming companies won't be out of limbo just yet.

Despite the situation, many are still optimistic about the current state of the gaming industry in China.

Yang of Blue Lotus voiced confidence the company would eventually begin getting government approvals again.

“We don’t think that the regulation will impact the sector forever. We think that Tencent is still able to break this siege and continue to publish new and popular games.”

The King Pro League, Tencent's official Arena of Valor tournament which is currently ongoing, has garnered an impressive 240 million daily views in China. While smaller gaming companies might be worse for the wear, gaming juggernauts like Tencent and NetEase will still have numbers like these to fall back on after the freeze has come and gone.