Gaming firms hope to bounce back next year

New licensing measure suggests 2,000 titles are likely to receive approval

The Chinese government has resumed issuing approvals for gaming titles after a nine-month freeze.

Analysts interpreted the move as a positive for the world's largest gaming market.

A batch of games has been reviewed and licenses will be issued soon, according to Feng Shixin, deputy director of the copyright bureau of the Publicity Department of the Communist Party of China Central Committee.

"The first group of games has been reviewed. We will hurry up and keep reviewing and issuing publication numbers. Owing to the large number of games waiting to be reviewed, it will take a while to complete the work," Feng said on Friday at an annual gaming conference in Haikou, Hainan province.

His remarks caused shares of Chinese mainland online gaming giant Tencent Holdings Ltd to soar over 4 percent on the Hong Kong stock exchange on Friday.

The jump was attributed to the expectation that Tencent's revenues from gaming will gradually pick up in the future.

The company called the measure "a major boon to the Chinese gaming industry".

In a statement, it said the measure "confirms the authorities' determination to have active management over the industry", and sets the direction for the future development of the cultural industry.

Pei Pei, a researcher at Sinolink Securities, said in a recent report the gaming industry is still under tight regulatory controls. There is a cap on the number of games that can be released in the market, and minors are not allowed to spend too much money and time playing games.

Yet, the gaming market may post a moderate recovery, not explosive growth, next year, Pei said.

"The market will become extremely competitive in the following three months as we expect at least 2,000 games will be approved for market release," Pei said.

The approval freeze followed a market shake-up in early 2018, after concerns emerged that gaming was causing social problems like addiction, and wasting of time and money among youth. The freeze had dramatically slowed the local gaming market.

China's gaming industry is suffering its slowest revenue growth in a decade, as local regulators had tightened their grip on a market. Experts think the market is reaching a saturation point.

Buoyed by 626 million Chinese players, the gaming market grew by 5.3 percent year-on-year to more than 214 billion yuan ($31 billion) this year, compared to the 23-percent year-on-year increase in 2017, said a recent industry report.

The report is backed by three key players: the Game Publishers Association Publications Committee, which is part of the China Audio-Video and Digital Publishing Association; gaming database Gamma Data Corp; and International Data Corp.

The report noted that mobile gaming accounted for more than 60 percent of total game sales, playing an important role in the overall gaming market.

Wang Xu, founder and chief analyst at Gamma Data Crop, said as the government tightened its control over video games with strict policies, the gaming industry sought to adapt to the situation.

"As the demographic dividend is fading in China, gaming developers need to seek new ways of expansion. And competition is getting fiercer," Wang said.

According to the report, overseas markets have become a key source of income for Chinese gaming companies. This year, Chinese developers have earned $9.59 billion in their self-designed online games in the overseas market, up 15.8 percent year-on-year.

The industry report stated that more and more female gamers in China are spending money to play online. They have become a key consumer group. Female gamers' passion has created a market worth 49 billion yuan in 2018, with almost 14 percent growth year-on-year.