Game licenses issued by China’s top game regulator tanked in Q1 2020, with only 336 games acquiring the approval to monetize in mainland China, which is less than half of the number from the same period last year, according to statistics released on the website of the State Administration of Press, Publication, Radio, Film and Television (SAPPRFT).
The State Administration of Press and Publication (SAPP), which replaced SAPPRFT in early 2018 and uses its website to send out notices, approved 100, 106, and 103 domestic titles in January, February, and March, respectively. In March, the regulator also issued licenses to 37 overseas titles, allowing them to legally monetize in mainland China.
The 336 total marks a close to 60% year-on-year drop in the number of game approvals issued by the SAPP, which is consistent with SAPP’s effort to tighten game regulations. In the first quarter of 2019, the industry also saw game approvals plunge 58.3% year-on-year from 1975 to 823.
Game approval in China has gone through major changes in the past two years. In March 2018, the restructuring of the SAPPRFT, which placed the game approval responsibilities under the SAPP, resulted in a devastating nine-month approval freeze, shaking even behemoths like Tencent.
After game approval resumed in December 2018, the number of game licenses failed to recover to pre-freeze levels, primarily due to tighter regulatory oversight, as well as the backlog that built up during the nine-month hiatus. In fact, the SAPP requested in February 2019 that local authorities stop submitting new applications so that it could clear the backlog, according to a Reuters report.
In April 2019, the SAPP released a detailed set of rules for a new approval process aimed at reducing the total number of approved games and improving their overall quality. Low-quality copycat games that “lack cultural value” as well as poker and mahjong games, for instance, would be downright rejected, whereas high-quality games are likely to be prioritized.
The impact of the new approval process has been felt by the entire industry, with smaller developers that are unable to acquire new licenses or lengthen the lifecycle of their existing titles taking the brunt of it. According to a report from The Beijing News, 18,710 gaming companies deregistered and exited the market in 2019, almost doubling year on year.