The Chinese government recently decided to ban the release of new games by South Korean companies in China. “It is being said that the Chinese government unofficially told Chinese firms not to distribute games supplied by South Korean companies,” one of them explained.
Any game to be distributed in China has to obtain an approval in advance from the State Administration of Press, Publication, Radio, Film and Television of the People’s Republic of China. The approval requires the establishment of a branch office in China, employment of at least eight persons qualified for publication in the country, etc. This means partnerships with Chinese companies are almost essential for non-Chinese firms planning to distribute their games in China.
Companies who have already invested time into developing a game for release in China but who have not yet had it approved for release are likely to feel the effects of this ban first. It has seemingly already impacted one major South Korean developer, Nexon, who saw a seven percent drop in stock price shortly after China announced the licensing freeze. Nexon alone receives roughly 40 percent of its revenue from Chinese players, according to Pocket Gamer.
Last year, a total of 228 imported games obtained the approval, and the number of those imported from South Korea stood at 13.
“The Chinese game market, approximately 25 trillion won (US$21 billion) in size, is the largest one of its kind in the world,” said an industry insider, adding, “The Chinese government’s measure as a part of its economic retaliation regarding THAAD deployment in South Korea is likely to lead to significant losses on the part of South Korean game companies.”