China Issues Record Game Licenses After Losing 104 Trillion Won... Fluctuating Game Regulations

Regulatory Proposal Announcement Causes Market Cap of 104 Trillion Won to Vanish for Game Companies
105 Licenses Issued as a Hasty Attempt to Adapt

The Chinese government's regulation of the gaming industry has shown a 'zigzag pattern' due to its failure to properly adjust the pace. Although the largest-ever number of game licenses was approved just three days after the announcement of a regulation proposal that unsettled the market, market confusion does not seem to be subsiding.

According to local media such as China News Network and Daily Economic News on the 25th, the National Press and Publication Administration (NPPA) issued 105 game licenses to major game companies including Tencent and NetEase. The Game Working Committee of the China Audio-Video and Digital Publishing Association (CADPA) stated on its official social networking service (SNS), "This is the first time that the number of approvals in a single batch has exceeded 100, and the range of game companies receiving licenses has also broadened," adding, "It strongly demonstrates the authorities' clear support policy for online game development."

As of that day, the total number of game licenses issued this year reached 1,075, including 977 Chinese games (90.9%) and 98 overseas games (9.1%). The approval scale has significantly increased compared to 748 in 2021 and 512 last year. Local media reported, "As the licensing policy has become increasingly stable, the game market has grown significantly," and "The increase in license approvals since the beginning of this year has reassured the majority of game companies."

However, prior to this, companies were severely shaken by the government's move to strengthen regulations, resulting in a sudden plunge in stock prices. On the 22nd, NPPA released a draft regulation related to online games, which mainly set daily spending limits and prohibited daily login rewards, first-time recharge bonuses, and consecutive recharge rewards. Minors were also barred from accessing probability-based items or using game currency to purchase physical goods and services. These measures are interpreted as efforts to prevent paid service inducement and block addictive access by youth.

Following the disclosure of these details, the stock prices of China's top two game companies listed on the Hong Kong Stock Exchange, Tencent and NetEase, as well as the popular SNS among gamers, Bilibili, plunged intraday by 16%, 28%, and 14%, respectively. Tencent's drop that day was the largest since the 2008 financial crisis. The combined market capitalization lost by the three companies in one day reached $80 billion (approximately 104.24 trillion KRW). Some media outlets, including Bloomberg and the Hong Kong South China Morning Post (SCMP), interpreted the authorities' sudden large-scale issuance of game licenses as an attempt to quell this market shock.

Nonetheless, apart from China's relatively high-level regulatory policies, the Chinese game market is expected to maintain strong growth this year. According to CADPA, the total revenue of China's game industry this year is projected to reach 303 billion yuan (approximately 55.17 trillion KRW), a 14% increase from the previous year. This is the highest revenue since related statistics began to be compiled in 2003. The number of game users in China this year is also expected to reach 668 million, marking an all-time high.

This content was produced with the assistance of AI translation services.