The National Press and Publication Administration granted publishing licenses for 73 online games, including 69 mobile games. Other developers, including Zhong Qing Bao, Leiting, XD Inc, and CMGE Technology Group, also received licenses.
NetEase shares gained more than 5% in premarket trading in New York before falling back in a general selloff during the morning.
Beijing began granting new game title approvals in April after an eight-month freeze that dealt a blow to game developers. Between April and August, the Chinese game regulators granted 241 approvals for new video game titles, although none were granted to Tencent and NetEase.
Thomas Chong, an equity analyst from Jeffries, called the move positive for gaming sector and said he expects game-centric broadcasting platforms, as well as short-form video platforms, will also benefit from the easing.
Tencent, China’s most valuable company, led the gaming industry in terms of revenue last year at US$32.2 billion, well ahead of Sony’s US$18.2 billion and Apple’s US$15.3 billion, buoyed by its broad portfolio, which includes US, European and South Korean companies, according to a report by Dutch research company Newzoo in July.
But Tencent, along with NetEase, are facing a tougher domestic market. Since last year, people under 18 years old have been limited to playing three hours of video games a week – from 8pm to 9pm on Fridays, Saturdays and Sundays. Play is also allowed on public holidays.
Meanwhile, China’s economic growth has been greatly hampered by Covid-19 resurgence amid the country’s strict zero-Covid policy.
Tencent’s domestic gaming revenue decreased 1% to 31.8 billion yuan in the June quarter – and 4% from the previous quarter – due to fewer big game releases, lower user spending and the impacts of government measures to protect minors. Meanwhile, the company’s revenue shrank 3% to 134.03 billion yuan, marking the first quarterly contraction since the company’s 2004 listing.
Amid increasing uncertainties, both Tencent and NetEase have accelerated overseas expansion. This month, Tencent acquired a 49.9% economic stake with 5% voting rights in Guillemot Brothers Limited, French gaming company Ubisoft’s largest shareholder.
Last month, NetEase acquired French game developer and publisher Quantic Dream.