China ends video game licensing freeze
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China ends video game licensing freeze

In brilliant news for investors, the Financial Times has reported that Chinese regulators have ended their nine-month freeze on video game approvals. Citing the country’s top media regulator, the paper says that Beijing has resumed licensing, which was put on hold last March. This has huge ramifications for the video game industry, which counts China as a major – and fast-growing – market.

Both Take-Two Interactive and Activision Blizzard have exposure to the Chinese market

graph 03 china

Source: Yahoo Finance

Chinese officials say that it could take months for regulators to clear the backlog of 5,000 games – mostly mobile titles – that are awaiting approval. They also released a list of titles that have been approved for the New Year which doesn’t contain any games made by overseas companies. Additionally, they called for game developers to have a “stronger sense of social responsibility” and warned that censorship would increase.

Previously, Beijing has taken a dim view of video games, blaming them for declining eyesight in minors, behavioural problems, and a host of social ills. However, senior officials in the country are not blind to video gaming’s power, and regulators have also called for game makers to focus on quality. They claim that local titles could be an engine to “promote Chinese culture, propagate Chinese values and showcase Chinese tastes” as they go global. Things that regulators are looking to clamp down on include illegal games, pornography and gambling.

It’s clear that Beijing retains a complicated relationship with the video game industry. It’s also clear that homegrown titles will probably be at an advantage when it comes to regulatory approval. But there’s no doubt that the great thawing of the video game industry in China is a boon for video game makers all over the world – and that the market remains ripe for western companies which are able to work with Chinese partners on new games.

Disclosure

Dominion holds Activision Blizzard and Take-Two Interactive in its Global Trends Ecommerce Fund.


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