China has continued to issue licenses to sell games. Authorities have approved a list of 45 games eligible for release.
As a result, the shares of game companies began to rise. The ban lasted for 9 months, causing game production and publishing activities in China to be delayed, causing great damage to game makers. After 263 days, this activity was approved but still to a limited extent.
Game licensing has a positive effect on companies’ stocks. For example, Tencent increased NetEase 6%. The best results are shown in Bilibili Inc when increasing up to 15%.
At the same time, the government also did not include Tencent and NetEase titles on the list of approved games. Analysts predict that both companies will remain under pressure for a while at least for now, as these are the two big game companies in mainland China. A similar situation happened after the 2018 ban.
Overall, the lifting of the ban is a favorable time for the gaming industry according to Niko Partners analysis. “More than 5,000 game companies have been restricted during the nine-month freeze in China by local authorities. Many game companies have to change their content to fit the requirements or others become unsustainable and have to be dissolved, mostly in small and medium-sized companies, “- the report said.
According to analysts, it is unclear whether the next time local authorities will continue to relax the measures or not or remain a moderate view as now because many issues are still calculated. Most game companies achieve accelerated profits once the version number is licensed. This makes them hope that game life will return to normal as before.
In addition, last year, the number of new products in the Chinese game industry was relatively small. Many companies have to make strategic transformations and adjust distribution of game products even during the testing phase.