China's tech crackdown is creating a gloomy outlook even for titans like Tencent

pcgamer.com:

The Chinese videogame industry has experienced its first fall in users and revenue in 14 years, according to a new report from Barron's(opens in new tab). The report comes after a year in which the Chinese government applied strict restrictions across the country's entire tech industry—restrictions which have only recently shown signs of relaxing.

According to the experts Barron's interviewed, the Chinese gaming industry—especially its biggest companies like Tencent and NetEase—is struggling under Beijing's approvals process for new game releases, which was recently frozen for eight months. The last year has also seen China impose new restrictions on the time that under-18s can spend playing online games(opens in new tab) and tighter censorship of in-game content, making it harder for the country's games industry to operate at home.

14,000 «small studios and gaming-related firms» had recently closed as of December 2021, according to the South China Morning Post(opens in new tab). In 2022, things aren't going better: Only 172 games have been approved for release by the Chinese government this year compared to 755 that had been approved by the same period in 2021. Even more alarming for China's most recognisable game companies is that the vast majority of those approvals were given to relatively small game devs and publishers; NetEase and Tencent remain iced out.

Barron's spoke to business professor Nir Kshetri, who explained that the government's unwillingness to approve licensed foreign games and «hardcore» (which I think we can loosely translate to 'big budget' or 'AAA') games «somewhat explains [Tencent and NetEase's] rush into overseas markets». In other words, one of the reasons Tencent keeps buying up game companies