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China forces 14,000 video game companies to close

Since the license freeze in 2021, China no longer authorizes any video game releases on its territory. A decision that has a lasting impact on the market.

China continues to put pressure on video game studios, even if it means slowing down the entire market. In accordance with the laws of the country, each game developed by a local studio, or intended to be marketed in the territory, must first obtain validation from the Communist Party. This applies in particular to games coming out on console and PC, but also for titles expected on the App Store and all mobile platforms.

Too bad for the video game market, Chinese regulators have stopped issuing new licenses since July 2021. A status quo which should also continue in 2022. According to the local newspaper South China Morning Post, this is the longest suspension since 2018. This time, and in the face of submissions “A little too aggressive” video game studios in the first half of 2021, the regulators had taken the decision to take an indefinite break. Pause which could therefore be prolonged.

What consequences for video games?

Since the license freeze, no games can be submitted to the Chinese App Store or updated. For its part, the Apple brand has withdrawn from its platform Chinese games that have not obtained their license (or renewal) since July 2020, in accordance with regional legislation. More globally, no game has obtained its authorization in the territory since last July.

A decision that is not without consequences. Since July 2021, they are approximately 14,000 Chinese video game companies forced to shut down, reports the newspaper through a study published Friday by the state newspaper Securities Daily. A figure on the rise if we compare it to the 18,000 companies that had left the industry in 2020. Note that this crisis is felt in all entertainment sectors: in China, ByteDance (owner of TikTok) as well as Baidu and Tanwan Games were forced to massively lay off on their video game departments, even if it means investing abroad, where the market is less repressive.

The question of Chinese ethics

Officially, China wants to suspend the new licenses to protect the youngest from screen addiction, considered a real scourge in the country. This repression could also be linked to recent government decisions to promote games more in line with the Chinese ideal, neither promoting violent behavior, nor Japanese titles, and even less that of male figures considered too effeminate.

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