The Chinese gaming industry is laying off employees amidst fear of harsh licensing rules

Insiders suspect that there will be no new licenses given in 2022

Insiders from the Chinese gaming industry have said that the gaming companies in Shanghai have started laying off several employees amidst fears of stringent publishing license regulations laid down by the government. Chinese media outlet Red Star Capital Bureau reported on Tuesday that well-known game developers, including NetEase, Lilith Games, and IGG, have either curtailed the development of in-house game projects or have laid off staff.

The Chinese government began the crackdown on gaming earlier last year when it brought in regulations where companies had to specifically have a server for Chinese players where they could not interact with players from other regions, and the officials also made rules for the number of hours children under the age of 18 to only three hours between 8 pm and 9 pm on Fridays, Saturdays, Sundays and statutory holidays. The Chinese government also banned all esports players under the age of 16 from playing in competitive tournaments.

Chinese gaming industry starts laying off employees: What are some of the new regulations they are afraid of

Chinese game companies restrict playtime
Image via Future

According to the new regulations by the NPPA, all games must go through a licensing and approval process.

  • Games will be required to post a ‘Healthy Gaming advice’ text before the start on a blank screen.
  • Age verification should be done with government issued documents to keep track of gaming time for underage users.
  • Games shouldn’t consist of any content that “Opposes the basic principles established by the Constitution” or demeaning the military, government, socialist principles, Mao Zedong Thought, or the leadership.
  • No corpses, skeletons, zombies, vampires, pools of blood, or blood of any kind in any color. When a character or player is killed, they should simply disappear. Changing the color of blood will no longer be enough.
  • Loot boxes cannot be purchased using either real or virtual currency, and there will be a limit on the number of loot boxes an Individual can open.

The aftermath of these regulations

As reported by South China Morning Post, a source from Lilith Games said the company disbanded a 2D game project named  “Apocalypse of Eden”, and also laid off all the workers, suspecting the reason to be the long wait for obtaining the publishing license and game registration numbers that have been on a halt since July of last year. Although, officials at the National Press and Publication Administration have said that they are still accepting applications for licenses as usual.  

China video games gender portrayal ban, chinese gaming industry laying off employees
An image showing a decrease in Tencent stock price in 2021 due to the new regulations

There have been rumors that the ongoing halt on new licenses and registration numbers might continue throughout this year too. This led to a shock for the companies as the prices of shares of Tencent Holdings, NetEase and Bilibili slumped in Hong Kong on Monday. Tencent, which runs the world’s biggest video gaming business by revenue, declined 0.1 percent on Tuesday after suffering a 5.2 percent beating on Monday.

The increased scrutiny of the game publishing license and registration number has caused several companies to shut down services, call-off projects, and even completely move out of the Chinese market. Fortnite shut down its Chinese servers in November last year soon after the government started making it hard for companies to get a license. Analysts estimated that the long-term effects of the new regulations could hamper the growth of the industry in China, which was reported to be making 150 billion Yuan ($32 billion) in the first half of 2021.

Although Chinese officials claim that the new regulations are only aimed at creating an addiction-free environment for the youth of the country, the new rules only seem to get out of everyone’s reach whilst striking a huge blow to the revenue of tech companies and forcing children to use fake IDs and VPN to access services.

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