China approves more games in a step toward normalization

Teenagers play games on their phone while sitting on a bench at Nanjing Road East in Shanghai, China, on Sunday, Oct. 3, 2021. China contained its latest Covid-19 outbreak just in time for a week-long holiday that started on Oct. 1, avoiding the need for travel curbs during a crucial period of consumer spending and domestic tourism. Photographer: Qilai Shen/Bloomberg

China approved its second batch of games this year following a months-long freeze, in a step toward normalization in the world’s largest mobile entertainment arena.

The approval of 60 new titles by the National Press and Publication Administration marks an acceleration from April’s 45 and include entries from studios like Genshin Impact creator MiHoYo Co. China’s two powerhouse games publishers, Tencent Holdings Ltd. and NetEase Inc., were absent from both lists, but analysts see their prospects for approval improving as well.

Shares of Tencent and Netease rose more than 3% on Wednesday, amid a broader surge in Chinese tech stocks. Live-streaming platform Kuaishou Technology jumped 5.8%.

“We are delighted to see established studios such as Perfect World, Shengqu Games, MiHoYo, and Changyou obtained approval titles this time, which we believe could indicate higher possibilities for Tencent’s and NetEase’s titles to be approved in coming batches,” Citi analysts wrote in a note to investors. “The approval announcement will also send positive signal of policy support to the overall China Internet sector.”

Jefferies analysts including Thomas Chong also list China’s big two among the likely beneficiaries from the latest approval, along with live-streaming platforms like Kuaishou and Tencent-backed Huya and Douyu. The gap between the two batches of approved games came after an upsurge in Covid-19 infections and lockdowns in the country over the past few weeks.

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

The faster pace in game approvals comes on the heels of a report this week that said China was preparing to allow Didi Global Inc.’s apps back on domestic app stores after concluding a probe into the ride-hailing giant’s operations. The news bolstered Chinese tech stocks on broader hopes of easing in regulatory oversight.