China's Regulatory War On Its Gaming Industry Racks Up 14k Casualties
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It isn't news that China has begun a campaign against video games within its borders. The battles in this war are being waged on a couple different fronts. In 2021, Beijing set new rules for what youths can play when it comes to games, as well as a strict schedule for when they can play them. This birthed an underground economy for account sharing to get around those rules, but the rules still had some effect. Chinese regulators also have exerted strict control over what foreign games are available in online stores, while those same regulators strictly control what games gain approval for release from within. This all seems to be some sort of legislative stream of consciousness from President Xi Jinping's belief that video games are somehow massively harmful and addictive to children.So what has the impact of all of this regulatory warfare produced? Well, according the South China Morning Post, no less than 14,000 shuttered gaming businesses within China itself.
China’s freeze on video game licenses continues. South China Morning Post notes that the National Press and Publication Administration (NPPA) has not released a list of newly approved titles since July 2021. Because of this, state-run newspaper Securities Daily reports, approximately 14,000 small game studios and video game connection companies, including those involved in merchandising or publishing, have gone under.Typically, the NPPA approves around 80 to 100 games a month, so the lack of an approved list has ground part of the industry to a halt. China is such a massive market, and the hiatus has caused uncertainty that has led to layoffs at game companies, and conglomerates with game divisions. However, it sounds like the smaller outfits have been hit the hardest.This is almost always the story when it comes to heavy-handed government regulations over an industry. The big players have the war chest and know-how to work within the regulatory system, while the small or up-and-coming companies simply fold under pressure. In this case, many of the larger gaming companies have diversified into off-shore presence in order to weather the storms from Beijing. Smaller companies don't have the ability to do likewise.And, in typical Beijing form, this freeze on approving new licenses to release games is being conducted with zero transparency.
No reason has been given for the hiatus, and the NPPA hasn’t stated when approvals will restart. Prior to this latest freeze, the longest period that new game licenses were not released was a nine-month window in 2018.All of this coincides with China's larger culture war, which has seen the government engage in control tactics as silly as regulating karaoke playlists to the far more serious destruction of democracy in Hong Kong. This means that the Chinese government is coming off less like a socialist nation and more akin to something like the Taliban, where strict control over culture is seen as some kind of spiritual requirement.Regardless, it must be a very bad time to be a game creator in China.
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