An estimated 14,000 Chinese dev studios have closed since licensing ‘freeze’

Game licensing ‘freeze’ set to continue in 2022

The past two years have seen China’s government impose stricter and stricter sanctions on the game development market. Now, it seems, the pinch is being severely felt. According to business registry company Tianyancha, over 14,000 Chinese game developers, publishers, distributors, and marketers decided to shut down operations since the summer of 2021.

As reported by Securities Daily and The South China Morning Post, the timing is appropriate, as July 2021 saw the country put a “freeze” on new game licensing, creating an enormous backlog of IPs, brands, and titles awaiting approval by The National Press and Publication Administration (NPPA). As such, studios waiting in lieu of their projects and releases to be approved, licensed, or certified have been forced to call it quits as their games remain unsold. Tianyanchan sets an estimate of 14,000 game-adjacent businesses since summer 2021, a rapid increase in ratio from 2020, which saw around 18,000 total closures in just one year.

These figures reflect an increasingly difficult business environment for Chinese developers, publishers, and other companies within the gaming industry. Recent years have seen a major crackdown on gaming — particularly mobile gaming — within the country’s borders. The government’s restrictions pertain to the age of players, the amount of time spent playing, the spending of monies within the past time, the content of the games themselves, and even public whistleblowing schemes. It’s an ongoing war between government and industry, one that sees powerful international conglomerates — such as Honor of Kings developer Tencent — able to weather the storm for the most part, while most smaller studios and publishers are left with very little option but to call it quits.

There is unlikely to be a ceasefire anytime soon, with many more industry casualties expected as the new year progresses.