A temporary ban on new games approvals has certainly caused delays for some gaming companies but getting access to the world’s largest gaming market is still worth the wait, writes Christopher Lethbridge
With over 619 million gamers and a market forecast to be worth £32 billion by 2022, the recent thaw in the Chinese games approvals process presents an exciting opportunity for the internationally renowned UK games sector. The UK’s proven expertise in developing groundbreaking games and technical expertise places it in an ideal position to take advantage of the Chinese market.
China is the world’s largest games market, boasting 25 percent of global market share in 2018. Chinese gamers are also willing to spend, with 94 percent of gamers purchasing in-game items, compared to 79 percent of US gamers – the world’s second largest market. It is this scale, recent and forecast growth, and propensity to spend, that makes the Chinese market such an exceptionally attractive proposition to games developers.
Regulatory speed bump slows China games approval
All games need to receive a license in China. Under Chinese law, video games are classified as internet cultural activity, thereby facing a range of restrictions on the types of content that is permissible, and requiring a lengthy approvals regime to ensure any new release complies with governmental constraints.
In early, 2018 the Chinese government implemented a broad departmental shakeup. As a part of this, a new department was created, the State Administration of Press and Publications (SAPP), to oversee the games approval process which meant that the games approval process was brought under the direct control of the Government’s Central Committee. This reorganisation resulted in a sharp halt to the approvals process, with no new game approved in China for nine months, while key positions were filled and new processes developed and approved.
The thaw on computer game approvals arrived in late 2018, with 447 domestically produced games approved in the two months leading up to Chinese New Year. However, with an estimated 7,000 games awaiting approval, the backlog is only growing. In February, regulators asked local authorities to stop submitting new applications as the backlog is already too large to deal with. Although this has forced another temporary halt to the application process, the authorities say they do plan to process 3,000 games in 2019. However, content restrictions and longstanding concerns about computer game addiction in Chinese youth presents an ongoing challenge for foreign titles looking to enter the market. On a practical level, this includes the formation of the Online Game Ethics Committee, a body to review games that potentially infringe on government sensitivities – including “anything that promotes or incites obscenity, drug use, violence, or gambling.”
UK games pedigree welcomed by Chinese gamers
The UK is home to over 2,200 active games companies with proven talent across a broad field of the games industry. Notable UK titles such as Grand Theft Auto V, the most profitable entertainment product of all time, as well as titles from Codemasters, Jagex, Team 17, Milky Tea and Miniclip all illustrate the potential for UK games companies in the Chinese market.
Although there has been a halt to the application process, the authorities say they do plan to process 3,000 games in 2019
An excellent template for collaboration was the series of agreements between UK racing games developer Codemasters and NetEase, a leading Chinese tech company. Under the terms of the deal – worth a minimum of £8 million over three years – Codemasters and Netease will jointly develop a new game, building on the respective parties’ expertise. This agreement comes on the back of a November 2018 agreement, with Netease purchasing the exclusive China rights to three games, and agreeing to provide the marketing, localisation and regulatory know-how necessary to successfully place a new game into the Chinese market. As part of the agreement NetEase will be responsible for ensuring regulatory approval for these three games.
As noted by Codemasters CEO Frank Sagnier, NetEase’s “unparalleled knowledge and track record in publishing AAA games will ensure that we are best positioned for growth in this key gaming market.” In return, and as noted by Brent Wang, business development manager at NetEase, NetEase will be able to take advantage of Codemasters’ “considerable strength” in the relatively underdeveloped racing game market in China.
Opportunities for UK games community
For UK companies looking to enter, explore and understand the Chinese market both the London Games Festival and ChinaJoy (China Digital Entertainment Expo & Conference) present exciting opportunities. The London Games Festival will be held from April 2-14, 2019 and will see Chinese delegations in attendance, as well as opportunities to gain a deeper understanding of the intricacies of cracking the Chinese market. For those interested in experiencing the market first hand ChinaJoy, held in Shanghai in August every year, is Asia’s largest gaming and digital entertainment conference. Eligible UK games companies can take advantage of UK government grants to attend ChinaJoy as part of a Ukie and CBBC supported delegation, operating in its fifth year.
For more information about the Chinese games market, contact Creative Sector lead Christopher Lethbridge in the UK at firstname.lastname@example.org