China’s National Press and Publication Administration released details on Tuesday regarding the regulatory approval of new domestic online games in June, including a total of 60 titles and involving companies such as miHoYo, Migu Interactive Entertainment, and Hero Games.
This is the second batch of online games that have been reviewed in China so far this year. In April, a total of 45 Chinese online games obtained formal approval for publishing and operations. Affected by the news, the US shares of China concept game stocks moved higher, with Bilibili rising by more than 5%, while NetEase and Douyu each rose by 2.5%.
New games by Tencent and NetEase were still not included in the most recent round of approvals. The total market share of these two companies exceeds 60%. However, market analysts believe that they will not miss approval for game publishing and operations, and the new games will help the local market business return to the growth channel.
Due to the impacts of COVID-19 and other factors, it is expected that game companies may face a difficult business environment in Q2 of this year. Under regulatory supervision aimed at preventing minors’ addiction, business segments such as game distribution have also been affected.
Tencent‘s top business, value-added services (including its game and social network income), achieved revenue of 72.7 billion yuan ($10.9 billion) in Q1 of 2022, an increase of only 0.41% year-on-year. Game revenue in the local market decreased by 1% to 33 billion yuan ($4.95 billion), mainly due to the direct and indirect impacts of various protection measures for minors, limiting the number of active and paying users.
Previously, there was uncertainty about the timing of the Chinese authorities’ issuance of game publishing and operations approvals, and game companies generally lowered their expectations for 2022. According to the “2021 China Game Industry Report” by Gamma Data, the revenue of China’s game market in 2021 was 296.513 billion yuan ($44.48 billion), a year-on-year increase of 6.4%, a significantly slower growth rate than the 20.71% in 2020. Revenue from mobile games was 225.538 billion yuan, further increasing the overall proportion.