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China’s gaming crackdown puts 14,000 companies out of business

14,000 gaming-related firms have deregistered since August

A robot and a human friend sit on a couch watching television in a near-future styled apartment
Pathea Games’ Super Buckyball Tournament, about a sports league in a cyberpunk future, is in limbo awaiting regulators’ approval.
Image: Pathea Games
Owen S. Good is a longtime veteran of video games writing, well known for his coverage of sports and racing games.

The Chinese government’s ongoing freeze regarding video game licenses has shut down 14,000 gaming-affiliated companies in that nation, the South China Morning Post reports, consolidating that market further in larger companies and conglomerates even as it causes them to lay off workers and look overseas for business.

The licensing moratorium has few direct ramifications for western video game fans, but it does mean that some Chinese-developed projects face delays beyond their developers’ control if they’re ever coming to overseas markets. One such example, as Polygon mentioned last week, is Pathea Games’ Super Buckyball Tournament, which just wrapped up another beta test.

Pathea hopes to launch its futuristic sports title by March, but Chinese regulators haven’t approved any new video games since the end of July. The 14,000 games companies affected have all deregistered since then, according to the state-run financial publication Securities Daily.

This has been the longest shutdown of new game licensing since a nine-month stretch in 2018, which followed a regulatory overhaul. In the late summer of 2021, Beijing also announced very tight restrictions on the time that minor children spend gaming, reflecting a national anxiety over games’ effect on culture and their youth.

President Xi Jinping raised the topic of gaming addiction in March 2021 during the Chinese People’s Political Consultative Conference, a major annual plenary session for national government policy. The same month, Pathea Games applied for certification.

Pathea vice president Aaron Deng told Polygon during a Super Buckyball Tournament preview that the studio hoped to get approval this month, paving the way for an early access launch by March or April. When it launches in full, Pathea plans to bring it to Nintendo Switch, PlayStation 4, and Xbox One, as well as PC via the Epic Games Store and Steam.

Typically, the Morning Post says, China’s National Press and Publication Administration would license between 80 and 100 video games each month. That came to a full stop in August, with no official explanation.

That shutdown, plus the restrictions on youth gaming time, present significant headwinds to Chinese businesses, as well as foreign firms, looking to do business in the world’s most lucrative video games market. The South China Morning Post said that large players like ByteDance (which owns TikTok), Baidu (China’s search engine company), and Tanwan Games all laid off employees last year.

Even larger companies like NetEase and Tencent holdings have shifted resources to overseas markets, the Morning Post reported. NetEase in October acquired Grasshopper Manufacture, the studio led by Goichi “Suda51” Suda. And at the end of December, Tencent — which already owns Riot Games, Supercell, and Funcom, and has large stakes in Epic Games, Activision Blizzard, and Ubisoft — announced it had purchased Back 4 Blood maker Turtle Rock Studios.

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