The first quarter of 2023 has been positive for China video game approvals and Niko Partners expects total game licenses for the full year to surpass 1,100, returning to a level last seen in 2020. The National Press and Publication Administration (NPPA), the government regulator responsible for issuing game licenses (ISBNs) approved 288 games in Q1 2023, of which 261 were domestic titles and 27 were import titles. This is already 56% of the entire total for 2022, which was negatively impacted by a freeze on video game approvals which lasted from August 2021 to April 2022.
Niko Partners identified several positive trends in Q1 2023 that signal a normalization of game approvals and return to pre-2021 levels:
- Domestic game approvals have returned to a regular cadence of around 87 titles approved each month. This is similar to the level each month prior to the August 2021 game licensing freeze.
- Import game approvals resumed in December 2022, with 44 licenses issued, after a one and half year freeze. Another 27 import game licenses were approved in March 2022, which is a positive sign that we could expect 2 or 3 more batches in 2023.
- The NPPA published an “updated ISBN” list on January 17 that allowed 24 already approved games to update their license with a new platform or operator. It is now becoming easier for game developers to update their existing license, which is a plus for a company like Blizzard who are currently looking to switch operators.
While we do not expect the number of game approvals to return to pre-2018 levels (before the first freeze on game approvals and introduction of stricter regulations), we are confident that Q1 2023 represents a “new normal”. Game licensing had been a significant bottleneck for global video game companies over the past two years, with only 120 import games approved in 2021 and 2022. The more positive outlook for both domestic and import games comes as government regulators and bodies acknowledge that compliance and self-regulation has increased across the industry, especially in regard to youth gamer regulations, which has alleviated the concerns that led to the freeze in 2021.
Niko Partners has identified additional trends that signal the situation is more optimistic for global game companies looking to enter the China market in 2023:
- Korean game developers have seen the largest boost since the December 2022 restart with 11 games of Korean origin receiving licenses. This is notable for the Korean games industry as no games from Korea had been approved between March 2017 and December 2020 due to geopolitical reasons. Japan, Korea, the US, Poland and Canada are the countries of origin that have seen the highest import game approvals since December 2022.
- Global IP holders and Chinese game developers have found ways to utilize the domestic game approval process, which is faster than the import game approval process, for global game titles. Games such as Age of Empires Mobile and Metal Slug: Awakening, which are based on global IP from Microsoft and SNK respectively, have been approved as domestic games because of licensing deals where a Chinese partner licenses, develops and publishes a title based on a global IP, with worldwide distribution rights.
- Key titles for PC such as Valorant, Lost Ark, The Division 2 and more have been approved for release. On mobile, titles such as Merge Mansion, Blue Archive, Pokemon Unite, Ni No Kuni: Cross Worlds, Gran Saga, Uma Musume Pretty Derby and Cookie Run: Kingdom have also received licenses. Three Kingdoms: War Chess, a game based on Koei Tecmo’s Romance of the Three Kingdoms PC game IP, received an import license in December 2022. The title, which was developed and published for smartphones by Alibaba, launched and maintained its position as a top 10 grossing title since its debut last month.
The return to a regular monthly cadence of domestic game approvals, the restart of import game license approvals, a more positive stance from regulators, and increased supply of global IP into the market are strong indicators of a new normal for China game market licensing in 2023. With over 1,000 games expected to be approved in 2023, the industry is poised for growth and expansion, offering opportunities for both domestic and foreign companies to succeed this year.
Keep up with the latest approved games in China through Niko’s monthly China Games Market Database. Our comprehensive database includes all approved games for PC, mobile, and console platforms, including rankings, approval date, release date, genre, developer, country, operator, testing phases and dates, and more.
Originally developed for Niko’s internal use, China Games Market Database is an invaluable resource for developers, publishers, investors, and anyone interested in the China gaming market. Subscribe here to stay ahead of the curve.