SINGAPORE—Chinese video game developer Tencent Holdings Ltd.
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won its first license for a new title since last June, allaying some investors’ concerns about the prolonged absence of approvals granted to tech giants in the country.
“Health Defense,” a health education mobile game operated by a company controlled by Tencent executives, including Chairman and CEO Pony Ma, was among 73 video games Beijing approved this month, according to a statement Tuesday from China’s National press and publication administration.
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China’s second-largest video game company after Tencent also received its first new game approval since last July.
Beijing last summer stopped issuing new licenses for titles and limited playing time for players under the age of 18 as part of a wider regulatory crackdown on the country’s internet sector. Tightened controls sent China’s video game market into decline for the first time in more than a decade in the first half of this year.
Approval of the titles by Tencent and NetEase is likely to have limited economic impact, but it suggests that government licensing is becoming more normal and will help dispel concerns that industry leaders may be specifically excluded, said Alicia Yap, an analyst at Citigroup.
Without new approvals, Tencent has had to rely on aging cash queues like “Honor of Kings” to retain users and compete with rivals. Hong Kong-traded shares of Tencent and NetEase were both down 1.44% on Wednesday morning, less than a 2.96% drop in the Hang Seng Tech index.
Tencent unveiled the game at its annual video game event in May 2021. It said the game, in which players battle pathogens, could help users learn about immunization and fight rumors during the Covid-19 pandemic.
Since Beijing resumed the licensing process in April, the regulator has kept a steady pace of approving dozens of new games each month, but the rate is lower than in previous years, and most of them have been granted to smaller companies. No foreign games have been approved since last year. In China, companies must seek government approval to charge players for a new game.
“Sustaining the current pace is probably the bottom line for the market,” said Robin Zhu, an analyst who focuses on China’s Internet industry at Sanford C. Bernstein.
The Chinese publishing regulator also now allows video game companies to apply for cross-platform licenses for existing game titles, rather than requiring separate licenses, giving developers more flexibility to adapt games for different platforms. Tencent and NetEase also had one of their titles approved to be adapted for other platforms, according to a separate statement from the regulator on Tuesday.
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