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

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 TournamentThe beta testing of a new product has just concluded.

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. According to Securities Daily, all 14,000 affected games companies have deregistered.

The shutdown has been the longest since an eight-month period in 2018 following 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. Pathea Games also applied for certification in the same month.

Aaron Deng was Pathea’s vice president. Super Buckyball Tournament The studio had planned to receive approval for the project this month. It would allow them to launch the game early in March and April. Pathea will launch the full version on Nintendo Switch, PlayStation 4 and Xbox One. It can also be downloaded via Epic Games Store or Steam.

Typically, the Morning Post says, China’s National Press and Publication Administration would license between 80 and 100 video games each month. The licensing stopped in August. There was no 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.

The Morning Post reported that even larger corporations like NetEase or Tencent Holdings have moved resources overseas. 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.