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14,000 Companies Go Out Of Business Due To China’s Freeze On Gaming Licenses

China’s freeze on granting video game licenses has extended into 2022. According to South China Morning Post, the National Press and Publication Administration (NPPA) has not published a list of approved new video game titles since the end of July of 2021. This marks the longest licensing hiatus within the country since 2018.

In turn, this freeze has had a tremendously negative effect on the Chinese gaming market. In fact, about 14,000 gaming-related businesses have been forced to deregister since July, based on a report from Securities Daily.

This licensing freeze comes on the heels of major regulations and crackdowns on gaming within the Chinese market. In March of 2021, Chinese President Xi Jinping expressed concerns about the psychological impact of gaming on children. In August, a state-run media company referred to gaming as “spiritual opium.” One month later, on September 1st, China enacted gaming restrictions that limited the time children in the country spent gaming.

At this time, no reason has been given for this licensing hiatus. Additionally, the NPPA has not yet announced when it will restart licensing approvals.

The Profit‘s Take:

I feel like the Chinese gaming situation continues to get worse and worse every time we bring it up. Honestly, I did not know China had that many gaming-related firms. Either way, it seems like a MASSIVE number of shutdowns. 18,000 businesses shut down in 2020, and an additional 14,000 have shut down since July. Maybe there is a hidden variable here beyond government restrictions? Of the 14,000 companies, we don’t know how many of them are studios. Even if only 10% of them are game studios, 1,400 studios shutting down is still a HUGE blow to the industry.

(All information was provided by Kotaku, Polygon, and South China Morning Post)

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