China Approved Online Games Hit Record as New Draft Rule Stirs Industry Fear

BEIJING, December 26 (TMTPost)— Chinese authorities suggested the regulatory environment is still friendly to the online gaming business after a draft regulation stirred the whole industry’s fear about crackdown.

Credit：Assassin's Creed Jade

The National Press and Publication Administration (NPPA) has granted licenses to 105 video games for December, including Tencent Holdings' “Assault Fire: Future” and NetEase's “Firefly Assault”, China’s top gaming regulator announced on Monday. The approval for more than 100 titles this month continued to send positive signs that the Chinese government support the prosperity and healthy development of online gaming, according to a statement released by an official WeChat account of the Game Working Committee of China Music and Digital Association the same day.

The approval suggests the first time for NPPA to approve more than 100 titles in a single batch and the latest batch of titles come from a broader of game publishers, which made a wide range of gaming companies felt greatly encouraged, the statement said. It added that the recent move is NPPA’s another approval this month after it gave the green light to import a group of overseas titles on December 22, which convincingly showcased authorities’ actively supportive stance toward development of online gaming. As of December, NPPA has given the nod to 1,075 games this year, about doubling last year’s 512 titles, the statement noted. There are 977 demotic games approved this year,compared with 512 games last year, and imported games approved this year more than doubled to 98 titles.

NPPA’s announcement came days after it released a draft rule on online games management, which was deemed as further tightening up regulation on the video games.The draft guidelines, which are soliciting public opinion, ask online publishers not to offer inducement rewards such as daily login rewards, first-time recharge rewards, or continuous recharge rewards. It also prohibit the publisher and operator of online games from providing high-priced game props trading through hype or auctions. All online games are required to set a limit on user recharge amounts, and provide pop-up warnings to remind users about irrational consumption behavior. The draft rules also highlight measures for protection of personal information and minors, such as setting caps on game spending of minors at various ages, and banning minors from giving tips during live-steaming online games. But the proposal about processing game approvals within 60 days is deemed as an improvement that is expected be welcomed by the industry.

Shares of major game companies suffered a bloodbath over the draft regulation on Friday. NetEase’s Hong Kong-listed shares plunged 24.6% to close at HK$122.00, the lowest since February 2022. That is the biggest daily drop since NetEast listed there in June 2020, which wiped out HK$115.1 billion (US$14.7billion )off the firm’s market.Tencent shares settled at HK$274.00 with a decline of 12.4%, losing HK$367billion (US$47 billion) in market value. Bilibili shares slide 9.7% to close at HK$80.30, the lowest since November 2022.

The new draft regulation ”does not fundamentally change key elements such as the business model and operation pace of the online gaming industry”, Vigo Zhang, or Zhang Wei, the Vice President of Tencent Games, told multiple media outlets on Friday. Zhang commented the new measures under the regulation clarify “the authorities’ support for the online gaming industry, providing instructive guidance encouraging the innovation of high quality games.”Regulators have released the new measures to seek comprehensive public comments, which is believed to be “more conducive to the orderly and healthy development of the gaming industry”, said Zhang.

However, Zhang’s remark didn’t ease stock selloff. The American depository receipts (ADRs) of NetEase tumbled as much as 22% and closed about 16% lower on Friday, Tencent ADRs settled 9.9% lower after a more than 10% decline intraday, and Bilibili ADRs dropped as much as 10% before down nearly 5% at close. NetEase responded on Saturday that the new draft rule won’t have material affect on the company.

The proposals which raised the industry’s concerns could be subject to amendments or adjustments as they are just parts of draft request for public comments, and regulators’ origianl intention is to facilitate the prosperity and healthy development of the industry, rather than to curb it, the state-run newspaper Shanghai Securities News cited experts. Approval for over 100 video games this month is a positive signal to the gaming market, and it is helping to address the concerns caused by the recently released guidelines aimed at curbing excessive spending on online gaming, Zhang Yi, CEO and chief analyst at iiMedia Research, said, according to China Daily.