Josh Ye

HONG KONG (Reuters). China removed a nine-month ban on gaming licences. The move came after Tencent, an industry leader, had made significant changes to its business practices. Analysts and industry sources also said that the ban caused economic problems.

In August, the biggest video game market in the world, worth $47 billion, was stopped by the watchdog. This is due to a crackdown which restricted minor game-playing. On Monday, 45 licensed games were released after the freeze was lifted.

Sources said analysts and analysts that, while this was a surprise timing, it is a sign of how companies have reacted to heavy criticisms from the authorities about their non-compliance.

Chenyu Cui (senior analyst, research firm Omdia) stated that regulations this time are “certainly the most strict they have ever been.” “Every company is afraid of being out of compliance.”

A source at a game studio of which Tencent Holdings (OTC:) is a major shareholder said it was requested by Tencent to remove English words from its game, avoid the colour red and scrap wordings such as “headshots” or “death” to be compliant.

The studio delayed the international release of the title in fear that the film could be interpreted as violating Chinese laws, the source claimed. He declined to identify himself because he was not authorized to talk to the media.

During a similar freeze on licences in 2018, some projects opted to release their games – including Tencent’s Bladed Fury and Iris.Fall – overseas, while waiting for the domestic situation to be resolved.

Tencent did not comment.

China’s regulators are also proactive in making sure compliance is maintained in the sector of state media that was once known as “spiritual opioid”.

According to two sources, companies could still submit games for approval during suspension and receive regular feedback about changes or modifications needed in their content and monetisation.

According to Reuters memos, a gaming group supported by the state organized a developer training course. The program stressed that games should reflect “a correct set value” and not include any religious or violent elements.

Niko Partners’ senior analyst Daniel Ahmad said over 5,000 games companies had been connected to the system. Many of these firms made modifications to their in-game content. Those that did not comply have been investigated, fined, and the regulators have taken action.

He said that all concerns have been addressed.

NetEase, a smaller competitor to Tencent (NASDAQ:), and more than 200 companies pledged to regulate themselves in September to fight gaming addiction.

ECONOMIC HIT

Beijing couldn’t ignore the economic effects of the crackdown on gaming, which was causing companies to reorganize their homes.

During the licence freeze, about 14,000 video gaming-related firms – including those involved in merchandising, advertising and publishing – shut, according to business registry firm Tianyancha.

Some highly anticipated projects have also been spiked, such as Lilith Games’ Eden Apocalypse. According to one representative, this is due to a shift in the direction of the company.

According to three sources in the gaming industry, many projects are being hit with a freeze on hiring because they feel pressured to reduce their budget and size.

Tencent, a large employer of new graduates, stated during its results that its hiring pace would slow. Reuters reports that Tencent and others plan to reduce jobs.

According to Reuters, “They do this to protect job,” a senior industry official said. He was referring the lift of the freeze but declined to name him as he is not allowed to address the media.

National Press and Public Administration (the regulator for the game industry) did not respond when we asked them.

LOOKING FOR OVERSEAS

Chinese gaming shares surged after regulatory relaxation on Tuesday. Some analysts believe this showed government commitment to the industry.

However, some people were cautious about the fact that only 45 games had been approved at this point, in contrast to the 80 to 90 which are usually cleared once per month.

The landscape has completely changed, and some are now considering leaving China altogether or diversifying.

According to Pillar Legal’s Greg Pilarowski (head of Pillar Legal), small gaming companies in China may consider moving towards blockchain gaming. However, this could lead them out of China. Beijing has banned unapproved cryptocurrency.

Pilarowski explained that “the current climate in China is very difficult for gaming companies.” “So a lot of folks are asking how they could get into blockchain games… because crypto and blockchain have been very profitable for many people in the US.”