China approves more video games in further easing after crackdown

The approval of 60 new titles by the National Press and Publication Administration marks an acceleration from April's 45. PHOTO: REUTERS

TOKYO (BLOOMBERG) - China approved its second batch of video games this year following a months-long freeze, in a step toward normalisation in the world's largest mobile entertainment arena.

The approval of 60 new titles by the National Press and Publication Administration marks an acceleration from April's 45 and include entries from studios like Genshin Impact creator MiHoYo. China's two powerhouse games publishers, Tencent Holdings and NetEase, were absent from both lists, but analysts see their prospects for approval improving as well.

The Hang Seng Tech Index jumped more than 4 per cent on Wednesday (June 8) as the slew of approvals bolstered bets that a year-long crackdown that wiped out US$2 trillion (S$2.75 trillion) in market value from the sector was nearing its end.

Alibaba Group Holding and Bilibili led the rally, surging by as much as 11 per cent and 19 per cent respectively. The buying frenzy also lifted shares of Tencent and NetEase, despite the companies being absent from the approval list.

"We are delighted to see established studios such as Perfect World, Shengqu Games, MiHoYo, and Changyou obtained approval titles this time, which we believe could indicate higher possibilities for Tencent's and NetEase's titles to be approved in coming batches," Citi analysts wrote in a note to investors. "The approval announcement will also send positive signal of policy support to the overall China Internet sector."

Jefferies analysts including Thomas Chong also list China's big two among the likely beneficiaries from the latest approval, along with live-streaming platforms like Kuaishou and Tencent-backed Huya and Douyu. The gap between the two batches of approved games came after an upsurge in Covid-19 infections and lockdowns in the country over the past few weeks.

Beijing's tech crackdown - which has ensnared sectors from e-commerce to fintech and even online education - spread to online gaming in August, when regulators introduced stringent measures capping play time for minors and imposed new requirements aimed at curbing addiction. The media watchdog has also been reviewing new titles to determine whether they meet stricter criteria on content and child protection, slowing rollouts, Bloomberg News has reported.

The faster pace in game approvals comes on the heels of a report this week that said China was preparing to allow Didi Global's apps back on domestic app stores after concluding a probe into the ride-hailing giant's operations. The news bolstered Chinese tech stocks on broader hopes of easing in regulatory oversight.

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