China to import 45 foreign video games, grants multiple licenses to Tencent

By Josh Ye

11:57 JST, December 29, 2022

BEIJING (Reuters) – China’s video games regulator granted ublishing licenses to 45 foreign games for release in the country，including seven South Korean games, further lifting rigid curbs that have hammered the industry for 18 months.

South Korean gaming stocks, including Netmarble Corp 251270.KS, NCSOFT 036570.KS, Krafton 259960.KS, Kakao Games 293490.KQ and Devsisters 194480.KQ jumped between 2% and over 17% in morning trade on Thursday, a day after Chinese authorities granted publishing licenses.

Among the imported online games approved by the National Press and Publication Administration are five to be published by Tencent Holdings 0700.HK such as “Pokémon Unite” by Nintendo 7974.T and “Valorant” by Riot Games, according to a list the regulator released.

The regulator also approved 84 domestic games for the month of December, according to a separate list released on Wednesday.

The approval of imported games effectively marks the end of Beijing’s crackdown on the video games industry which began last August when regulators suspended the game approval process.

Regulators resumed issuing game licenses to homegrown games in April, and the approval of foreign games was seen as the last regulatory curb to be removed.

Unlike in most other countries, video games need approval from regulators before release in China, the world’s largest gaming market.

Beijing’s year-long crackdown on the industry has dealt a significant blow to Chinese tech companies including Tencent and NetEase Inc 9999.HK which derive substantial revenue from publishing both self-developed and imported games.

Through various affiliated companies, Tencent, the world’s largest gaming company, has effectively received a total of six licenses in December, a source with knowledge of the matter told Reuters.

Tencent only received its first commercial game license in over a year-and-a-half last month, which was seen then as an important signal towards policy normalization for the industry.

Other imported games approved include CD Projekt’s CDR.WA “Gwent: The Witcher Card Game” and Klei Entertainment’s “Don’t Starve.”

Besides Tencent, NetEase, ByteDance, XD Inc 2400.HK and iDreamSky 1119.HK have also received game approvals in December.

Shares of Tencent, XD Inc, iDreamSky rose between 0.8% and 5.2% in Hong Kong, while Japan’s Nintendo 7974.T gained 0.2%.

The number of licenses granted are fewer than in previous years. China approved 76 imported games in 2021 and 456 in 2017.

In a year-end meeting this month, Pony Ma, founder of Tencent, said that the company has to get used to Beijing’s strict licensing regime, and the number of new games that China approves would remain limited in the long run.