‘Monster Hunter’ on hold as China hits pause on new video games

SHANGHAI, China – China appears to have halted approvals of new online game licenses, with reports Wednesday that a government shake-up was causing paralysis in the world’s biggest gaming market.

The hold-up has battered shares of market leaders like Tencent, which have plunged since the company said it had been ordered to remove hit game Monster Hunter: World from sale, only days after its debut.

Bloomberg News reported Wednesday that China had stopped approving any new mobile games as part of a wider shake-up of the market.

Checks of the National Radio and Television Administration’s online list of approved games showed that no new titles had been added since May. The list is normally updated regularly.

Quoting unnamed sources, Bloomberg said approvals for online, console and mobile games have been stalled for months by regulatory personnel changes linked to President Xi Jinping’s ongoing consolidation of power, leaving developers stranded.

China’s Economic Daily in June had quoted the Ministry of Culture and Tourism, the other state body involved in approvals, as saying the agencies were undergoing “organizational adjustments.”  

Regulators have also balked at approving games featuring violence and gambling, Bloomberg quoted a source saying, as Xi pushes a “purification” campaign in media and entertainment. 

Hong Kong-listed shares in Tencent, which derives much of its income from games, dropped more than 3% on Wednesday and are down around 10% since last week’s announcement.

A Tencent spokeswoman did not immediately respond to a request for comment. 

Other Chinese game developers also lost ground on Wednesday after reports of the approval freeze emerged. Perfect World ended 0.11% lower and 37 Interactive was down 0.86%, after both fell more than one percent earlier in the session.

Alpha Group shed 2.27%.

“For new game approvals, there will continue to be a drag,” Alicia Yap, a Citigroup internet research analyst told Bloomberg.

“If they previously didn’t get an approval, it seems that there will continue to be a hold on that.”

China is the world’s largest gaming market, with an estimated $37.9 billion in revenue, according to research by Newzoo.

Xi dramatically strengthened his grip at a Communist Party leadership congress late last year, becoming the most powerful Chinese leader since Mao Zedong.

Subsequent government personnel changes are widely believed to have led to a logjam in some decision-making, partly as officials avoid making major moves until the dust settles.

China’s gaming industry in particular has drawn government attention over concerns about violent content and game addiction.

Under pressure to curb gaming marathons on Tencent’s smash hit King of Glory (known as Arena of Valor in other territories) mobile multiplayer battle game, the company last year started restricting daily playing times for children.

On Thursday, Tencent reported a profit of $2.59 billion or 17.87 billion yuan for the quarter ending in June, a 2% dip from the previous quarter, and their first decline in profit in almost 13 years. Observers point to the regulatory woes as the cause, but they also believe that the effect will be temporary, and that Tencent will likely be able to adjust. – Rappler.com