MSG Team's other articles

12308 Ageing Populations in the West and their Impact on Healthcare Management

Shock of Gray The term shock of gray refers to the phenomenon of the western societies having older people as a percentage of the total population than the younger people. in other words, the shock experienced by having more retirees and those over 70 years of age and the graying of the population are expected […]

9052 The Economic Impact of Cape Town’s Water Crisis

Cape Town has been in drought for three years. The situation is the same across most of South Africa. Other cities like Pretoria, Durban, and Gauteng are also facing a severe shortage of water. At the present moment, water is being rationed by government agencies across most of South Africa. However, the problem with Cape […]

12668 Cash Management Module in ERP

Cash management module provides information relating to cash flow of the organization, by processing and analyzing all cash and bank transactions, arising out of payment of supplier’s invoices, receipt from sales invoices, stand alone payment and unallocated payment/receipts. Cash management module also allows analyzing financial transactions for a given period of time and provides information […]

9301 Do Farm Loan Waivers and Bank Bailouts Make for Sound Economic and Fiscal Policies?

Farm Loan Waivers, Bank Bailouts, and Moral Hazards Farm Loan Waivers are the Flavor of the Season as Indian States take turns indulging in a game of who waives the maximum loans taken by the farmers. Indeed, with elections approaching, a form of Competitive Populism has begun wherein each political party is trying to outdo […]

11906 What Makes Some Cities and Regions Hotspots of Innovation

Why Do Silicon Valley and Bangalore Score over Regions and Cities? Silicon Valley in California State in the United States and Bangalore in India, as well as Shanghai in China, are known to be hotspots of innovation wherein they attract the best talent and the most number of startups as well as entrepreneurs compared to […]

Search with tags

  • No tags available.

China has surprised the global gaming community by starting a full-fledged crackdown on the gaming industry. The Chinese government has not been the first one to try and restrict online gaming. For instance, in 2011, the government of Korea created a regulation which prohibited minors under the age of 16 from playing online games between midnight and 6 am. However, the Chinese regulations are definitely the strictest. Also, they are likely to cost video game publishers billions of dollars in lost revenue since China is the number one gaming market in the world.

In this article, we will have a closer look at the Chinese video game industry as well as the impact of this crackdown on the industry.

The Chinese Gaming Market

The Chinese gaming market overtook the American market in 2017. It now has over 600 million active players and is the largest gaming market in the world. One of the biggest reasons for China’s rise is its massive population. For instance, the number of gamers in China is about twice the size of the entire population of the United States. The revenue derived from this market is close to $40 billion per annum. A cursory look at the statistics is enough to understand that the Chinese gaming market is the most important gaming market in the world.

What Is the Gaming Crackdown?

The Chinese premier Xi Jinping is of the opinion that multinational companies are addicting the Chinese youth to video games. He believes that this is causing health issues in Chinese teenagers. Also, the productivity of these teenagers is being compromised because of their addiction to these games.

As a result, he has asked the regulatory bodies to clean up the Chinese gaming industry. As a part of the cleanup, multiple efforts have been taken. Firstly, the Chinese regulatory authorities have issued no new licenses for video games since the beginning of 2018. Since even free games require a license to operate in China, this means that the Chinese authorities are simply prohibiting the launch of any further games. Also, many existing apps which provide content which was deemed to be objectionable by the Chinese regulators were closed down.

Who Will Be Affected?

Since the gaming industry is such a large industry in China, the crackdown would end up creating many casualties.

  • Publishers: The publishers would be the first casualty of this war on video games. Some of the largest publishers of video games are present in China. For instance, Tencent is the number one publisher of video games in the world.

    If anyone has played a video game in the recent past, chances are that the game was owned by Tencent. At the present moment, the stocks of Tencent are taking a severe beating because of the strict regulatory climate. Hence, China’s policies will end up hurting one of its own giants.

    At the present moment, Tencent is the fifth largest corporation in the world. Its market capitalization exceeds that of companies like Facebook. However, if the Chinese crackdown continues this may not be the case for very long.

  • Employees: if the Korean gaming industry is any precedent, increased regulation will lead to more consolidation in the industry. The gaming industry like any other industry is dominated by a handful of big players with smaller players on the fringes.

    If the regulations are made stricter, the smaller players will be hurt the most. As a result, they will end up selling to the competition. When consolidation happens in any industry, a lot of employees find themselves redundant. This is likely to happen in China as well. Hence, China may end up compounding its problems. It is already witnessing a slowdown thanks to the trade war with the United States. Creating more unemployment will only make matters worse.

Risks

The Chinese government faces several risks because of the high handedness and the knee-jerk reaction it has displayed in this issue.

  • Opaque Regulation: Many international investors are finding this sudden crackdown on gaming to be very disturbing. Investors make long-term investments in any country in the hope that the legal environment will be stable.

    If a particular industry was not regulated when it was started, it could not suddenly be made to face severe regulations and that too without any visible reason! China’s brazen conduct is now scaring off investors who are beginning to believe that the status of the video game industry today could be the status of any industry tomorrow.

  • International Growth: China needs to have a large and valuable domestic industry. This is what will give it a bargaining chip while negotiating with foreign powers such as the United States. However, Chinese policies are making it impossible for local companies to survive and thrive locally. These companies will be forced to move abroad in search of greener pastures. This will impact the tax revenue as well as the employment status of China.

To sum it up, the Chinese government has unwittingly unleashed many regulatory hurdles on video game companies. The end result will be that many of these companies will not survive in the long run. This sudden crackdown will have wide-ranging consequences for companies in China as well as abroad.

Article Written by

MSG Team

An insightful writer passionate about sharing expertise, trends, and tips, dedicated to inspiring and informing readers through engaging and thoughtful content.

Leave a reply

Your email address will not be published. Required fields are marked *

Related Articles