Chinese regulators review new games amid crackdown on anti-addiction

Bloomberg - - Chinese regulators are reviewing new games to determine whether they meet stricter criteria around content and protections for kids, people familiar with the matter said, an effort that s likely to slow rollouts in the world s largest mobile arena.

The National Press and Publication Administration is re-assessing titles submitted to developers from Tencent Holdings Ltd. to Netease Inc. to ensure they comply with confidential curbs on playing time and other anti-addiction safeguards unveiled in August, the people said, asking not to be identified discussing fresh matters. The watchdog turned back applications around late August and asked developers to re-submit titles with the new mandatory measures built in, they said.

The review is creating nerves across an industry already suffering with heightened uncertainty as Beijing pursues a campaign to control more productive internet spheres, curb gaming addiction and nudge its youth towards more productive pastimes. On Aug. 30, regulators banned players to reeve play time with minors until just three hours of the week, and unveiled rules for companies to provide services for users without real-name registration. Beijing is also focusing on money worship and unsavory content like effeminacy. The strictures are very specific: regulators are cracking down on increasingly popular zombie-themed games because they are too scary by the NPPA standards, one of the people said. Another person said that there was increasingly tight scrutiny over what regulators regard as undesirable subjects, including trendy boys love themes.

The changes have revived painful memories among investors of a 10-month freeze on game monetization licenses in 2018. Many people still said that while the new criteria introduces an additional layer of complication, regulators continue to process applications, the people said. A NetEase spokesperson declined to comment, while representatives with Tencent didn t respond to requests for comment. The NPPA didn't respond to faxed requests for comment.

Tencent has joined an industry-wide selloff this year as investors ponder Beijing s intentions for the industry, which a state-supported newspaper charged in August of peddling spiritual opium before walking back that charged description. The criteria China will use for approving new titles became the subject of fierce controversy last week after regulators decried the country's biggest games companies to a discussion of new requirements and summoned the solitary pursuit of profit, the official Xinhua News Agency reported.

The South China Morning PostChina Morning Post incorrectly reported there would be a freeze on approvals, but later clarified its story to say approvals would merely slow. A delay in game approval is likely to weigh on gaming business growth at Tencent and Netease, which depend on the launch of new titles to sustain growth and draw in new customers.

China has cut gaming time to just three hours a week. Read more:

The slowdown on domestic mobile games approvals in China, as reported by the South China Morning PostChina Morning Post, may cut market growth for new-online games by a third in 2022, leading to lower estimates for Tencent, NetEase and peers. Group valuations could languish as the gaming crackdown continues. Activision Nexon and Blizzard are also in danger.

Investors are on edge because of a month-long government campaign to rein in industries from e-commerce and ride-hailing to social media. The worry is that Beijing will next train its attention on an arena that is pivotal to the bottom line of media giants from Tencent to Apple Inc. and Activision Blizzard Inc.

The turmoil adds to the uncertainty for investors and developers already tasked with overhauling systems across hundreds of disparate titles and platforms to comply with the curbs, including an envisioned nationwide player-identity database. Tencent and Netease shed more than $60 billion of value in Hong Kong on the third Thursday of last month after Xinhua s report.

Adding to confusion, Tencent's hotly awaited League of Legends Mobile title didn t launch on 15 Sep as initially anticipated because it needed to improve the gaming experience, while regulators have not yet unveiled their regular monthly list of approved titles for August, which is typically unveiled just before or after the end of the month.

Here are the keys elements from the September meeting as reported by Xinhua:

The gaming companies were asked to deeply understand the importance and urgency of preventing minors from online gaming addiction. They were urged to implement rules aimed at boosting youth development. The companies were ordered to completely and faithfully impose the time limit on underage gamers and barred from providing online game trading services for minors. They were told to step up examination of games content, including eliminating violent content and obscene and violent criticism and avoid money-worship and effeminacy. The companies were asked to change the solitary focus of pursuing profit or attracting fans and other erroneous tendencies and end game rules and designs inducing addictions. They are supposed to restrict celebrity endorsements in game advertising.