Tencent Shares Surge on News That China is Approving Video Games Again

Tencent Shares Surge on News That China is Approving Video Games Again

Tencent Shares Surge on News That China is Approving Video Games Again

If the Chinese regulators have changed their tune on video game approvals, this could be a great sentiment shift for Tencent and other beaten down video game companies trying to make a mark on the massive Chinese market.

After a almost 9-month freeze on video-game approvals, Feng Shixin, deputy director of the Ministry of Propaganda's Publishing Department, said that a "first batch of games" had recently been reviewed for sale in the Chinese market, Caixin has learned. He added that the ideology watchdog will assign licenses at the soonest though there is a huge number of applications sitting in the pipeline.

Some of the games have passed examination and they will issue the approvals as quickly as possible, Feng said during the China Games Industry Annual Conference held in Hainan Province.

China stopped approving new titles from March amid a regulatory overhaul triggered by growing criticism of video games for being violent and leading to myopia as well as addiction among young users. It cited Feng Shixin, deputy director of the Communist Party's influential propaganda department, telling an industry forum that the government was prepping licenses for green-lit titles. In response, Tencent and NetEase among other major publishers have placed a time limit on underage players.

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"While there is no clear legislation on video game regulation, it's up to the regulator to decide what they pass and what they don't".

The long halt in game approvals has taken a toll on the world's largest gaming market. Chinese games are on way to generate $40 billion in revenues in 2018, according to market researcher Newzoo.

China is witnessing massive growth in its online gaming market, which reached 235.5 billion yuan (about 34.3 billion USA dollars) a year ago, according to data from the Cyberspace Administration of China. To offset the pressure in its consumer-facing gaming business, Tencent went through a major reorganization in October to put more focus on enterprise services. Tencent shares jumped 3.4% today on this thawing of the video game approval freeze in their home country.

"This is clearly exciting news for China's gaming industry", a Tencent spokesman said in written comments. "As the review and approval process for games resumes, we are confident that Tencent will be producing more compliant and higher-quality cultural work for society and the public". The news of the regulatory freeze overseas has dragged down many gaming companies including Tencent Holdings (TCEHY).

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