Tech

Tencent Gets China’s Approval for Its First Game in More Than a Year

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SINGAPORE—Chinese videogame developer

Tencent Holdings Ltd.


TCEHY -0.08%

won its first license for a new title since last June, allaying some investor concerns about the prolonged absence of approvals granted to tech giants in the country.

“Health Defense,” a mobile game for health education operated by a company controlled by Tencent executives including Chairman and Chief Executive

Pony Ma,

was among the 73 videogames that Beijing approved this month, according to a statement Tuesday from China’s National Press and Publication Administration.

NetEase Inc.,


NTES -2.25%

China’s second-largest videogame company after Tencent, also got its first new game approval since last July.

Beijing last summer halted granting new licenses to titles and restricted the playtime for gamers under 18 years old as part of a broader regulatory crackdown on the country’s internet sector. Tightened scrutiny sent China’s videogame market into decline for the first time in more than a decade in the first half of this year.

Approval for the titles from Tencent and NetEase is likely to have limited financial impact, but it suggests the government licensing is becoming more normal and will help remove concerns that the industry’s leaders might be specifically excluded, said Alicia Yap, analyst at Citigroup.

Without getting new approvals, Tencent has had to rely on aging cash cows, like “Honor of Kings,” to retain users and compete with rivals. Hong Kong-traded shares of Tencent and NetEase both fell 1.44% on Wednesday morning, smaller than a 2.96% drop in the Hang Seng Tech Index.

Tencent unveiled the game at its annual videogame event in May 2021. It said the game, where players battle pathogens, could help users learn about immunization and fight rumors during the Covid-19 pandemic.

China’s Tencent is backing the developers of blockbuster videogames such as “Pokémon Unite” and “League of Legends.” But Beijing’s crackdown on the industry at home, including when minors can play online games, could affect the company’s global videogame empire. Photo composite: Sharon Shi

Since Beijing in April resumed the licensing process, the regulator has kept a steady pace of approving dozens of new games each month, but the rate is lower than in previous years and most of them have been given to smaller companies. No foreign games have been approved since last year. In China, companies must seek government approval to charge players for a new game.

“Maintaining the current pace is probably the base case for the market,” said Robin Zhu, an analyst that focuses on China’s internet industry at Sanford C. Bernstein.

The Chinese publishing regulator now also allows videogame companies to apply for cross-platform licenses for existing game titles, instead of requiring separate licenses, giving more flexibility to developers for adapting games for different platforms. Tencent and NetEase also had one of their titles each approved to be adapted for other platforms, according to a separate statement from the regulator on Tuesday.

Write to Raffaele Huang at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the September 15, 2022, print edition as ‘Freeze on New Games Ends for Tencent.’

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