Video gaming in China

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Games market of China by revenue per platform in 2015.[1]

Video gaming in China is a massive industry and pastime that includes the production, sale, import/export, and playing of video games. China is the largest, highest grossing and the most profitable video game market in the world, since 2015.[2] The landscape of the topic is strongly shaped by China's average income level, rampant software piracy, and governmental measures to control game content and playing times. In 2011, China's PC game sector was worth $6 billion, the largest in the world.[3] Arcade games are also a thriving industry in China. Console games were banned from the country in 2000, but the ban was lifted in July 2015.[4]

In esports, China has been the world leader in terms of tournament winnings, possessing some of the best talents in the world across multiple video games, as well as one of the largest pool of video gamers.[5] As of 2017, half of the top 20 highest earning esports players in the world are Chinese.[6]

China has been described as the 'Games Industry Capital of the World', with its market size exceeding the US in mid 2017, and some of the world's largest video game companies.[7]

History[edit]

Prior to June 2000, video game consoles and arcade machines were gaining popularity in China. Due to fears that the devices — and the worlds produced by them — had a negative effect on the mental and physical development of children, the Chinese government banned the production, import, and sale of consoles and arcade machines in June 2000.[8] The ban did not include games available on personal computers (PC), and as a result, the PC gaming market in China flourished over the next fifteen years.[9]

However, legitimate acquisition of games and the hardware to play them was still relatively expensive.[10] A large number of PC gamers in China acquired software through illegal downloads and pirated software websites to avoid the cost. Developers of legitimate games in China recognized that, to compete with this black market, they had to develop games that had a free or low upfront cost model but offered a way to monetize their games over time. Many Chinese-developed games became online games offering numerous microtransactions to recoup costs; such games could be offered at Internet cafés, which became a popular option for Chinese players that could not afford computer hardware, even as the price of computing equipment dropped over the next decade. This created a boon of massively multiplayer online games (MMOs) in the Chinese market and which helped to establish market dominance of companies like Tencent, Perfect World, and NetEase.[10] PC cafes proliferated in urban centers as China's population continued to grow.[9] Western free-to-play and subscription based games like League of Legends and World of Warcraft, poised to take advantage of this model, also became successful.[9] It also prompted Chinese developers to develop numerous clones of popular Western games that they would offer at low cost, an issue that still persist presently.[9]

Through the first decade of the 2000s, the Chinese government still had strong restrictions on PC games. Chinese law prevents high tech companies in China from having partial or full foreign ownership; for video games, this meant that Western games had to be licensed to a Chinese company for the games to operate within China. Separately, the Chinese government had placed strong restrictions on content that could be offered in video games and other contemporary media, and until 2018, the process was considered vague and inconsistent. Two agencies oversaw the process until 2018: the State Administration of Radio and Television (SART) and the Ministry of Culture and Tourism (MOC), which existed in different branches of the Chinese government and created additional buearacracy.[11] A notable issue of this came up in 2009 when Blizzard Entertainment desired to transfer the operating license for World of Warcraft from The9 to NetEase. While the game had previously been approved by the government agencies, the transfer of operations created new questions that were not resolved for nearly a year, during which the game was unavailable for much of that time.[9]

The ban on arcade machines was dropped in 2009, but while arcade were permitted to operate, they had to take several safeguards to prevent excessive use by youth.[12] However, since such arcades offered a low-cost way to play games without a PC, they still became a thriving industry comparable to PC gaming at internet cafes. As a result, Chinese gamers frequently visit the arcades to play action games, particularly fighting games, and occasionally unlicensed arcade ports of popular PC or mobile games such as Angry Birds or Plants vs. Zombies.[13]

When mobile gaming took off around 2007-2008, the existing approach to PC gaming in China made the free-to-play nature of mobile gaming readily amenable to the Chinese video game market. The Chinese game Happy Farm (2008) was included in Wired's list of "The 15 Most Influential Games of the Decade" at #14, for its major influence on social network games, particularly for having "inspired a dozen Facebook clones," the largest being Zynga's FarmVille.[14] A number of other games have since used similar game mechanics, such as Sunshine Farm, Happy Farmer, Happy Fishpond, Happy Pig Farm,[15][16] Farm Town, Country Story, Barn Buddy, Sunshine Ranch, and Happy Harvest, as well as parodies such as Jungle Extreme and Farm Villain.[17][18]

In 2015, China eased the restrictions on video game hardware by allowing game consoles to be manufactured in the Shanghai Free-Trade Zone and sold in the rest of China subject to cultural inspections.[8] In July 2015, the ban on video game consoles within the country was lifted. According to a statement from the country's Ministry of Culture, companies like Sony, Nintendo, and Microsoft — among others — were now allowed to manufacture and sell video game consoles anywhere in the country.[19]

2018 approvals freeze[edit]

An internet café in Tongyang Town, the county seat of Tongshan County, Hubei.

In March 2018, the organization structural of SART was changed, created a period of several months where no new game licenses were given out. Further, MOC had made the process of getting these licenses more stringent.[11] This period has significantly impacted Tencent, one of the largest publishers of video games for China. In August 2018, Tencent was forced to pull sale their version of Monster Hunter World from China as they had not gotten their license for it and the government received complaints about its content. Tencent were also blocked on publishing personal computer versions of PlayerUnknown's Battlegrounds and Fortnite Battle Royale. The license freezes was reported to have significant effects on those game publishers and developers that rely on Chinese sales.[11] In late August 2018, the Chinese Ministry of Education called on the Chinese government and SART to also address the growing issue of myopia in children which was attributed to long hours of gaming on small screens like with mobile devices. the Ministry of Education had asked SART to consider placing restrictions on the number of hours each young player can play a game. On news of this, Tencent shares lost 5% of their value, an estimated US$20 billion on the stock market the next day.[20][21] A further approval route was closed by Chinese authorities in October 2018; this "green channel" route that had been in place by August 2018, which allowed a game to have a period of one month on the market for purposes of consumer testing without having full government approval, but which had been seen by game publishers as temporary relief from the current ban. Tencent had been planning on distributing and monetizing from Fortnite Battle Royale via this method before this route was closed.[22]

With China's effective ban of new games continuing into October 2018, Chinese players have found other routes of getting new games, which include using Steam which uses overseas servers.[23] Further, existing titles released before the freeze that continue to offer new content have seen a resurgence in players and spending as a result.[22] To comply with the planned new rules, Tencent announced that all mobile games it manages in China will require users to use their Chinese ID to play. This will be used by Tencent to track the time that minors play the game and implement time limitations on them, among other steps to meet new regulations.[24]

By December 2018, the Chinese government had formed the "Online Game Ethics Committee" falling under the National Radio and Television Administration, which will review all games to be published in China for appropriate content as well as issues relayed to childhood myopia.[25] The Committee, by the end of the year, had restarted the approval process and will be working through a backlog of submissions to review in an expedited manner to allow new games to be released.[26] Initial approvals to 80 back-logged titles was granted within days, but notably lacked games published by Tencent and Netease, the two largest publishers in China.[27] After several more rounds, Tencent had two games approved near the end of January 2019, but did not include either Fortnite Battle Royale or PlayerUnknown's Battlegrounds, two major titles that were financial drivers in other countries.[28]

A second freeze on approvals started in February 2019, as any further approvals on new games were suspending until the Committee has been able to clear the backlog of the titles from the prior freeze. By this point, only about 350 games had been approved from the previous freeze.[29]

According to China's State Administration of Press and Publication, the freezes were put in place as the video game industry had growth too rapidly in China at a rate that passed the capabilities for regulation to keep up. The second freeze that started in February 2019 was to put in place to give regulators a change to tune the game approval process to meet the current market size. The freeze is expected to be lifted in April 2019, alongside a new set of regulations for game approvals. These new changes include limiting the number of games that can be approved each year to around 5,000 games, strictly banning video game clones and games with obscene content, and placing more anti-addiction controls on mobile titles aimed at younger players.[30]

The nearly year-long freeze has had rippling effects on the global gaming industry. Whereas in 2017, around 9,600 new games were approved, only around 1,980 were approved within 2018.[31] Tencent had been one of the top 10 companies in the world at the start of 2018, but by October, its stock had dropped in value by 40%, an estimated US$230 billion, and knocked the company out of the top ten.[32] Apple Inc. attributed revenue loss in the fourth quarter of 2018 to China's approval freeze, which had also affected mobile gaming apps.[33] The freeze is expected to impact total revenues of the video game industry in 2019, with one analysis projecting a decline in revenue from the previous year, the first time in only a decade.[34]

Domestically-produced games[edit]

China has domestically produced a number of games, including Arena of Valor, Westward Journey, The Incorruptible Warrior, and Crazy Mouse. There are a large number of domestically-made massively multiplayer online role-playing game MMORPGs in China, although many generally remain unheard of outside of the country.[35][36][37]

China does have a small indie game scene, limited primarily by the government oversight of video games, with indie developers not having the resources to assist in the approvals process.[10]

Plagiarism[edit]

Chinese developers have been known to copy video games from foreign developers which resulted in multiple clones of established video game franchises.[38] Some developers take inspiration from existing games and incorporate the designs, gameplay and mechanics to their own IPs.[39][40][41] There have been multiple lawsuits filed by major video game companies such as the case filed by Riot Games against Moonton Technology for copying its characters featured in League of Legends.[42] There have been reports where plagiarists are credited as the original creators. Analysts have attributed the rise in plagiarism to lack of knowledge of the original IPs due to non-releases of games in the Chinese Markets, delays or outright ban by the Chinese government.[43]

Censorship of video games[edit]

As with almost all mass media in the country, video games in China are subject to the national policies of censorship. Content in video games is overseen by SART/NRTA; publishers are required to obtain a license for the game in China from SART before publishing, which may be denied if the game contains elements deemed inappropriate. The process to submit games for a license and put them on sale following that is overseen by MOC.[11] The State General Administration of Press and Publication and anti-porn and illegal publication offices have also played a role in screening games.[44]

Examples of banned games have included:

In addition to banning games completely, several games have had their content screened to remove certain imagery deemed offensive or unfavorable. Common examples include skeletons or skulls being either fleshed out or removed entirely. Cases of which can be seen in Chinese versions of popular video games such as Dota 2 and World of Warcraft.

With the formation of the Online Game Ethics Committee in December 2018, nine titles reportedly were classified as prohibited or to be withdrawn, but this has yet to be confirmed by reliable sources. These included Fortnite, PlayerUnknown's Battlegrounds, H1Z1, Paladins, and Ring of Elysium. Eleven other titles were told that they needed to make corrective action to be sold within China, including Overwatch, World of Warcraft, Diablo 3, and League of Legends.[48]

See also[edit]

References[edit]

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