Tencent fails to win game approval as China concerns persist

HONG KONG (BLOOMBERG) – China approved its third batch of new games this year, but Tencent Holdings again failed to make the list, which traders watch to gauge Beijing’s intentions for the world’s largest mobile entertainment arena.

There were no Tencent games among the 67 titles approved by the National Press and Publication Administration in the group of licenses granted this week. The WeChat operator had missed out on two previous rounds that started April, when regulators resumed publishing regular lists of approved titles following a months-long suspension. Titles by smaller rival NetEase Inc. were also absent.

Tencent-backed mobile gaming developer iDreamsky’s Eternal Return was among the titles that won approval. Other titles included ByteDance’s role-playing mobile game Crystal of Atlan and Bilibili’s F.I.S.T.: Forged In Shadow Torch” for PC and consoles.

“We believe the two consecutive months of approvals should allay market concerns about industry trends,” wrote Jefferies analyst Thomas Chong in a note to investors. Quality content will be a “crucial factor for new games to be released in the future.”

Although absent from the list, Tencent and NetEase will benefit from the resumption of gaming approvals. Game broadcasting platforms Huya and Douyu International Holdings and short-form video platform Kuaishou Technology will also be helped by more content-driven traffic, he wrote.

Beijing’s tech crackdown – which ensnared sectors from e-commerce to fintech and even online education over a tumultuous year – spread to gaming in August, when regulators introduced stringent measures such as capping play time for minors and imposed other requirements aimed at curbing addiction. The media watchdog has since been reviewing new titles to determine whether they meet stricter criteria on content and child protection, slowing rollouts, Bloomberg News has reported.

Concerns persist about the long-term viability of holding shares in Chinese internet and gaming firms, following a year of unprecedented scrutiny from Beijing. Investors have been watching regulators’ moves to decide when to re-enter the market.