China shows indications of its intense crackdown on the game sector as it eases

November 28, 2022: Beijing is showing signs that an intense crackdown on the domestic video games sector will be easy, which may be bullish for Chinese tech giants, which include Tencent and NetEase.

On Tuesday, research company CNG and the China Game Industry Group Committee, affiliated with the gaming publish regulator, published a report praising the progress in reducing gaming addiction among people under 18.

The upbeat report could signal a more bullish outlook for the Chinese gaming sector.

“China’s strict regulatory approach in the previous year has resulted from a lack of enforcement and compliance all over key areas,” Daniel Ahmad, an analyst at Niko Partners. “With game companies fully compliant, we are seeing a positive outlook develop.”

The CNG report also singles out huge Chinese gaming companies, which include Tencent and NetEase, for their positive moves in enforcing the protection of minors.

For instance, Tencent and NetEase are using facial recognition to see whether the person who plays the game is an adult.

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In China, video games that need approval will be published and monetized. Another positive sign occurred the previous week when the regulators approved 70 new games for release. Among the blessings was a game titled Metal Slug, which awakens from Tencent, which marks the company’s commercial game license yearly, according to Reuters.

In the previous year, China froze games is approving in the summer and only began green-lighting games in April this year. But titles from Tencent, China’s significant gaming firm, have been present on the lists just now.

Tencent management in the previous week told analysts on its third-quarter revenue call that the company anticipate game licenses to be approved relatively quickly in the future, which adds to further signs of regulatory scrutiny on the sector, which eases.

Martin Lau, Tencent’s President, said the company sees “positive signals all over the path of macro and regulatory normalization.”