Beijing is displaying signs that its harsh crackdown on the domestic video game industry may be easing, which may be positive for Chinese tech giants such as Tencent and NetEase. On Tuesday, research firm CNG and the China Game Industry Group Committee, which is connected to the gaming publishing regulator, published a report in which they praised the advancements made in reducing gaming addiction among those under the age of 18.
The addiction of young people to gaming has long worried regulators. The National Press and Publication Administration of China introduced regulations last year that prohibited children under the age of 18 from playing online games for more than three hours each week.
The CNG study is credible because it was released in collaboration with a significant gaming industry organisation with connections to the regulator. According to a CNBC translation of the report, more than 70% of kids play video games for less than 3 hours each week, and the issue of minors being addicted to video games has “achieved a step toward resolution.”
The favourable report might indicate a more upbeat picture for the Chinese gaming industry.
According to Daniel Ahmad, senior analyst at Niko Partners, “China’s stringent regulatory stance over the past year has been a result of a lack of enforcement and compliance across critical areas.” We are beginning to notice a shift toward a more optimistic view now that game firms are completely compliant.
Major Chinese gaming giants Tencent and NetEase are singled out in the CNG report for their proactive efforts to uphold the protection of minors.
For instance, facial recognition is used by Tencent and NetEase to determine whether the player of the game is an adult.
The authorities’ last-week approval of a batch of 70 new games for release was another encouraging development. To publish and earn money in China, video games require clearance. Tencent’s Metal Slug: Awakening, the company’s first commercial game licence in a year and a half, was among the clearances, according to Reuters.
China stopped approving games in the summer of last year and didn’t start doing so again until April of this year. The largest gaming company in China, Tencent, has no games on the lists as of yet.
On its results call for the third quarter last week, Tencent management informed analysts that the business anticipates gaming licences to be awarded reasonably swiftly in the future, adding to other indicators that regulatory scrutiny on the industry is relaxing.
The company is “getting favourable indications throughout the road of macro and regulatory normalisation,” according to Tencent President Martin Lau.