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Intensified crackdown on video games dampens sector’s growth
Tencent Holdings, which runs the world’s largest video game business by revenue, denied on Wednesday that the PlayerUnknown’s Battlegrounds — a premium game exclusively operated by the company in the Chinese market — was to be “removed off shelves”. Although, the new game, referred to as PUBG, has not yet been approved by China’s media regulators, so makes no money, unlike its former hit King of Glory which has grossed record-high profits.

Tencent told Chinese media after the release of its Q2 earnings’ report that revenue growth for its mobile game business had slowed down mainly because the tactical tournament kind of games could not be monetized. Video game operators are not allowed to charge fees for a game itself and its virtual goods and services before the State Administration of Radio, Film and Television (SARFT), China’s top media regulator, approves its contents and issues a plate number for its release.

Although news about PUBG’s removal turned out to be a rumor, Tencent’s WeGame PC-gaming platform did execute some unexpected removals recently. In August, the platform announced to withdraw the just launched Monster Hunter: World, citing the reason that certain contents could not fully comply with requirements of relevant regulations. In September, the Internet giant’s popular poker game Everyday Texas was required to be removed.

Industry insiders believe the intensified crackdown on video games would not only affect big companies, but small and medium-sized players may be especially hit hard.

A Bloomberg report in mid-August provoked widespread concerns in the global video game market. It’s reported that Chinese regulators had actually suspended their work to review and grant new games permit to enter the market. A source claimed the “freezing” happened in the wake of the country’s across-the-board institutional restructuring.

Meanwhile, another source said regulators were concerned about the violent and gambling contents in certain games.

It was previously reported by GameLook, a B2B media specializing in the sector, that by the beginning of August, the SARFT had already suspended their approval work for four months, with nearly 3,000 new games expected to have become idle.

Liu Zhiping, Tencent’s president, said,“At the current stage, regulators have temporarily frozen their approval. With no plate number for publishing, new games could not be monetized. It’s because the regulatory agencies are going through reforms.”

Liu also noted that realizing the impact on the development of the industry, regulators have now begun to issue a kind of ‘green’ approval, through which companies would be allowed one month’s paid test run.

Some industry insiders said bigger companies could rely on the ‘green passage’ and former hit games to get through the bleak period, while most small and medium-sized companies are facing an existential crisis.

“Regulators are busy with ratcheting up their supervision and this has led to sluggish growth,” a veteran industry insider who didn’t want to be named was quoted by Chinese media as saying. He disclosed that over half of the companies in the video game sector had gone out of business this year.

Contents of video games in China have long been strictly reviewed and censored, with some criticizing them as “spiritual opium”. In 2015, the monopoly of the market by big players reportedly drove countless small players to bankruptcy, and now the expected one-year long suspension of approvals is believed to further dampen enthusiasm in the field.


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