But there's a big problem we are only now learning about: the Chinese government has stopped approving new game licenses, and it hasn't done so for months.
That has turned out not to be the case, as the company has pulled the title from WeGame.
The hold-up has battered shares of market leaders like Tencent, which have plunged since the company said it had been ordered to remove hit game "Monster Hunter: World" from sale, only days after its debut.
Tencent Holdings may run the world's biggest video games business by revenue and China's most widely used social media platform, but the company is finding out that it too is subject to the sometimes unpredictable workings of the government. A regulatory freeze and this week's removal of hit game Monster Hunter: World is hampering that effort, spooking investors long accustomed to Tencent's favoured position as one of China's leading corporate lights. Revenue from online games topped 25 billion yuan, up 6% year on year.
In China, game companies need to gain approvals from both the National Radio & Television Administration and the Ministry of Culture & Tourism in order to launch new games and make money in the game, Bloomberg reported. It said they will be able to continue playing the game but that the firm could not guarantee associated services would continue. The list is normally updated regularly.
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Quoting unnamed sources, Bloomberg said approvals for online, console and mobile games have been stalled for months by regulatory personnel changes linked to President Xi Jinping's ongoing consolidation of power, leaving developers stranded. Tencent had been counting on new games like the survival-themed "Fortnite" and "PlayerUnknowns' Battlegrounds" to revive growth in the People's Republic. It has resulted in new game licenses being frozen until the restructuring is complete.
Tencent reported its first profit decline in almost 13 years Wednesday.
"For new game approvals, there will continue to be a drag", Citigroup Global Markets' head of pan-Asia internet research Alicia Yap reveals, confirming that approval process will continue to stagnate in the near future. This was despite former and current employees telling The Information that Riot leadership held a massive, company-wide meeting in March to inform workers that the company would reach a deficit if they continued on the current path. The company led by Pony Ma generated revenue of 74 billion yuan ($11 billion) in the three months to June.
Xi dramatically strengthened his grip at a Communist Party leadership congress late past year, becoming the most powerful Chinese leader since Mao Zedong. In reality, though, as we reported at the time, bureaucracy seems more likely to have caused the issue.