Video game companies in China are closing up shop in droves

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·2-min read
The Chinese government hasn't allowed any new games to be released since July 2021
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  • Gaming

Since July 2021, the Chinese Communist Party has not allowed any video games to be released on its territory. To this decision various other gaming restrictions were enacted in the country related to minors' playing time. As a consequence that can be traced to these moves, some 14,000 video game companies have closed up shop in China. It's a situation that is causing worry among game publishers, as China is the world's largest market in terms of revenue generated.

Game over in China? Since the end of July 2021, China has not approved any new video game titles. Indeed, a Chinese law requires each game intended to be sold in Chinese territory to obtain the authorization of the Communist Party, whether it is a game for mobile, PC or console.

What amounts to essentially a freeze on new games has been going on for several months, forcing companies to shuffle staff, relocate or even close their doors. According to the South China Morning Post, more than 14,000 companies related to video games have had to shut down. The impact is significant as the Chinese market regularly ranks in first or second place in the video game industry with the United States.

A "scourge" for youth

The freeze comes as China regulated gambling time for minors in September 2021. Each young Chinese person under the age of 18 can play for no more than three hours per week. These regulations come at a time when the Chinese government is trying to address its young citizens' "addiction to screens," considered a scourge by authorities. Indeed it was not uncommon in China to see cybercafés where young people spent their day playing video games. For these minors, gaming could be a hobby, or a passion, but also even a job and a sign of recognition. Chinese players of video games like "League of Legends" were extremely well paid and viewed as genuine stars in their country.

While this freeze prevents Western games from entering the market, local games are also suffering from the situation. Digital giants such as Bytedance, Baidu and Tencent are relocating some of their studios to locations outside China, such as Taiwan or Hong Kong.

This crackdown could also be linked to the government's decision to promote games that are more in line with Chinese ideals. Indeed, the Communist Party wants to reduce violent behaviors in games, as well as remove male characters considered too "effeminate," said to be setting a bad example. Will this status quo continue in 2022? In any case, China doesn't seem ready to go back on its decision anytime soon.

Axel Barre

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