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Online Licensing Is a Game China Can’t Lose

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After a nine-month lunch break, China’s National Press and Publication Administration has reopened the window and started issuing game licenses again. Investors may be rejoicing, but rest assured that Beijing has a smile on its face, too.

Let’s be clear: The NPPA isn’t some sloth-like bureaucracy that plods forward at DMV speed. In normal times, the Chinese regulator issues domestic games approvals on a monthly basis. This week, it signed off on 45 titles, the first time it released a new list since July. In the 32 months between the previous freeze in 2018 and the most-recent one, it was giving consent to an average 109 games monthly.

Since then, though, Beijing has been even more vocal about how the content and digital industries should work. Much of this ties into its “Common Prosperity” mantra aimed at closing the divide between rich and poor, and making it easier for working families to raise kids.

Last year, authorities all but nationalized the after-school education industry as part of plans to have children spend less time in classrooms and parents less money on tuition. The government also imposed tighter restrictions on gaming time for minors, and curbed in-app spending. More broadly, it’s reined in the power of companies from e-commerce leader Alibaba Group Holding Ltd. to ride-sharing provider DiDi Global Inc. and services and delivery platform Meituan, all in the name of ensuring data is secure and consumers aren’t disadvantaged by tech giants’ size and ubiquity.

Companies are already on board with the common prosperity theme. In August, Alibaba vowed to plow “excess profits” in to helping merchants, while Chief Executive Officer Daniel Zhang in December told investors the company aspires “to be a force for positive change in society.”

But it’s in content — which includes games, video services and live-streaming — that Beijing can hope to exert the most influence over social norms and habits. The latest enforcement measures include a tax audit of live-streaming stars, with one influencer ordered to pay $210 million. After the last lockout of new game approvals ended, publishers returned with new titles that pushed communist slogans and patriotic buzzwords. Expect their cooperation to go even further this time. 

Tencent Holdings Ltd., the largest of the games providers, last month pledged to be a better corporate citizen and declared an end to the era of reckless growth. “We have a long term oriented corporate culture that focuses on user value, social responsibility, technology innovations and compliance, the key elements for sustainable and healthy growth,” President Martin Lau told investors.

With publishers suitably chastened, and rules on game time and spending more clearly enunciated, the NPPA has decided now is the time to open the spigot again.

Though Tencent and nearest rival NetEase Inc. were absent from this month’s list, they too know how to play the game. Despite the extended freeze, a new title released by Tencent — Chong Fan Di Guo (Return to the Empire)(2) — ranked second in the iOS store in China last week, rare for a game in its first week, Bloomberg Intelligence analyst Tiffany Tam wrote.

Tencent managed to put out a popular new game nine months into a regulatory pause by carefully managing its inventory and working with third-party publishers, instead of solely relying on titles developed in-house. Chong Fan Di Guo, for example, was published by Hainan Electronic Audio-Video Press, a unit of the Hainan Provincial government’s department of culture and sports. It received approval in April last year — Tencent was listed as the game’s operator. According to the company’s website, its aim is to “serve society and the people’s livelihood,” and “takes promoting excellent national culture as its own responsibility.”

When Beijing has publishers like that topping the charts, it knows it’s winning the game.

More From This Writer and Others at Bloomberg Opinion:

• Nationalization Beats Extinction For China’s Schools: Tim Culpan

• China Submits to a Painful Market Reality: Matthew Brooker

• Alibaba Has a Bigger Problem Than the Tech Crackdown: Tim Culpan

(1) Chong Fan Di Guo is also the Chinese translation for Adolf Hitler’sHeim ins Reich, a policy to bring all ethnic-German regions (such as parts of Poland, Austria and Czechoslovakia) back into the fold.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Tim Culpan is a technology columnist for Bloomberg Opinion. Based in Taipei, he writes about Asian and global businesses and trends. He previously covered the beat at Bloomberg News.

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