January 25, 2019 / 3:24 AM / 9 months ago

Tencent gets China nod for two mobile games, but not for blockbusters

(This version corrects last paragraph to reflect that apps deleted by the CAC did not include a video game by Tencent)

FILE PHOTO: A visitor plays a game on a smartphone at Tencent's exhibition booth at the Global Mobile Internet Conference (GMIC) 2015 in Beijing, China, April 28, 2015. REUTERS/Kim Kyung-Hoon/File Photo

By Pei Li and Se Young Lee

BEIJING (Reuters) - Chinese regulators have approved two of Tencent’s (0700.HK) mobile games for commercial launch, the first green lights for the firm in almost a year, though they are yet to make a keenly-awaited ruling on blockbuster PlayerUnknown’s Battlegrounds.

China’s State Administration of Press, Publication, Radio, Film and Television on Thursday approved 95 games in its fourth list since December, including two mobile games from Tencent Holdings Ltd and one from NetEase Inc (NTES.O), government data showed.

The Tencent games are Wood Joints and Folding Fan, both educational games that teach traditional Chinese architecture and craftsmanship.

The two games were announced in February 2018 to try to improve the image of an industry criticised by some parents and regulators for fuelling children’s addiction to video games, said Tianyi Gu, an analyst with gaming market researcher Newzoo.

Analysts and industry insiders say it is unlikely the two games can bring much revenue to Tencent, the world’s biggest game company and Asia’s biggest by market value, but the approval is still music to its ears, as the last time its games were approved was prior to March 2018.

The hiatus hammered Tencent’s shares last year.

Tencent and NetEase did not respond to Reuters’ requests for comments.

“We wouldn’t do commercialization with games like these two,” said a Tencent Games executive who is not allowed to talk to the media and so declined to be named.

Neither Tencent nor NetEase appeared on the first three batches of approvals since December, triggering speculation the two giants were neglected intentionally by the authorities.

However, “since the freeze started in March last year, it seems highly possible that the approval process is carried out on a ‘first in, first out’ basis,” said Newzoo analyst Gu.

Analysts are waiting for signs of whether Tencent will eventually win approval for PlayerUnknown’s Battlegrounds, a hugely popular game which it is currently unable to make money from by, for example, charging for in-game purchases.

China is home to the world’s largest video game market, where 620 million players spent $34.4 billion last year mostly on mobile and PC games, according to data from Newzoo.

However, authorities stopped approving the release of new titles from March last year amid a regulatory overhaul triggered by growing concern about violent content and game addiction, particularly among young players.

Zhan Chun Qiu, the NetEase game approved on Thursday, is a role-playing mobile game set in China’s ancient Spring and Autumn period when warlords and swordsmen fight each other.

Regulators are also stepping up efforts to tighten control over the country’s internet. China’s cyber watchdog said on Thursday it has deleted close to 8,000 “malicious” mobile apps.

Reporting by Pei Li and Vincent Lee; Editing by Muralikumar Anantharaman and Mark Potter

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