Games Industry

Behind the Iron Curtain: How the Chinese Game Industry Works

Regulations that nobody in the country pays attention to.

               

The Chinese gaming industry is isolated from the rest of the world, but it brings a lot of money. In 2018, the local PC market alone earned more than $ 15 billion – for comparison, this is half of all US industry revenue for all time, including consoles and mobile platforms. According to statistics from Niko Partners, a year ago, 630 million gamers, or 8% of the world’s population, lived in China.

These numbers alone are enough to understand why the West is trying to cover the Chinese market. We chose the main thing from the great Eurogamer material about how the gaming industry is organized in China.

According to Chinese laws, video games cannot contain anything that “threatens Chinese national unity, sovereignty, or territorial integrity” (think of Tibet or Taiwan). They cannot be propaganda of “cultism or superstition.” Well, of course, they cannot portray “obscenity, drug use, violence or gambling.” However, the last paragraph did not limit the distribution of lootboxes in the country.

Also, for distribution, the game must be released in China – a Chinese company.

For none of the laws there are legally fixed precedents or cases – that’s why the local government always has the last word on the admission or non-admission of the game to the market.

Developers have to act blindly. For example, the Chinese version of Shenmue 3 lost all its real city names – apparently, its authors decided to play it safe. And the publisher of Monster Hunter: World just before the release was refused a license – and in the end, Capcom lost the whole market.

In China, there are no analogues of ESRB or PEGI, because companies are engaged in self-regulation. So, Tencent makes it necessary to indicate the year of birth before registration in order to limit the time spent in the game for children. Due to the fact that no working classification exists, the developers act at random – as long as there are no complaints.

For example, the creators of Risk of Rain 2 had to replace the texture in the background of one of the levels – because one of the red spots “could look like blood”.

However, despite the abundance of censorship laws, they practically do not work in China – and therefore, any resident of the country can safely download the global version of the Steam client. Moreover – there are available all the games released in the West (with the exception of pornographic). The only platform element that is blocked in China is forums and communities.

I even tried playing Sleeping Dogs (which takes place in Hong Kong) – uploading it through standard Wi-Fi at the hotel. The game worked as usual – without a VPN and other tools.

You can download previously purchased games, set saves from the cloud, scroll through the list of products in the store. Everything is working. As a result, Steam at the moment is a huge gaping hole in an impregnable Chinese firewall.

Chris Thapsell

author Eurogamer

The reason why this happens is the bureaucracy that occurs when foreign games are allowed to enter the market. The SAPP (Public Administration and Publishing Administration) committee may review a product for compliance with the above laws for months – or even years.

Moreover, in 2018, problems arose in China, during which two different regulatory authorities could not agree on separate inspection points – due to which the work of SAPP was temporarily suspended. The government combined both structures into one, but the obstacles for developers did not end there.

You know what – this is **** I am a fortress. Last year at SAPP we didn’t advance a bit. And even if it turned out, the owners of Chinese platforms require a share of up to 50% of revenues.

Mike rose

Publisher Representative No More Robots

Therefore, both the developers and the Chinese players themselves are sent to Steam – and the government, apparently, so far prefers not to pay attention to the industry.

Moreover, this applies not only to the Valve platform, but to everything else as a whole – including consoles, the ban on which was removed in the country only recently. Even in 2013, when they could not be found on open sale, right in the middle of Shanghai there was a huge shopping center where you could find not only them, but also many other equipment that was not allowed for sale in the country.

Now he is still working – and there you can buy any games. In retail, there are official Xbox or Nintendo stands that look like in any legal western store. Games like Gears 5, Sekiro, or Fire Emblem aren’t up for sale – but their physical copies continue to stand quietly on the shelves. In fact, this is a “gray” market, for which the state has been turning a blind eye for decades.

There is Taobao, an online marketplace where games are distributed digitally. In 2017, the government even tried to limit its activities by banning the sale of foreign titles, but there was hardly any effect from that. As written on TechNode site, “sellers TaoBao do not know how to follow the rules – because no indication they were not allowed.”

As a result, it turns out that on paper in the Chinese gaming industry there is strong censorship and regulation – however, in practice, they practically do not work. Everyone who owns a credit card can buy any game on Steam or on Taobao. Yes, even in a retail store, which is in front of everyone.

The most interesting thing is that a year and a half ago Valve announced Steam China – a separate client for China. Previously, the company had to cooperate with the publisher of Perfect World to release Dota 2 and CS: GO in the country – and now they jointly launch a new platform there.

That’s just since then there was no news. It is also unknown what games there will be at the start – certainly not 30 thousand, as in the current Steam Global. Most likely, no more than 40 – including Chinese domestic and some foreign titles that have passed the SAPP test.

In fact, with the launch of Steam, China Valve will provide itself with only one thing – an official market presence. Moreover, the company will not have to have problems with SAPP, since the games will not be published “from the outside”, but directly inside the country. And the publishers themselves are profitable.

The Chinese audience just carries everyone. Two weeks after the launch of Risk of Rain 2, it was the second most populated player after the United States – and by that time localization had not yet been released.

Gearbox representative

Although we have extremely niche games in a strange genre, China is the fifth market for us.

developers of the Truck Simulator series

The question remains – what will happen to the Chinese users of Steam Global and their libraries. Recently, they have become more than 40 million people – which is almost half of the entire audience of the platform. It is possible that with the launch of the Chinese version of the Global launcher, they will simply be blocked, and users will not be counted on their purchased games.

However, according to analysts, this may not happen – the Chinese market is too unpredictable.

Taobao

It’s hard to say if Global will be blocked. If you asked any analyst, he would tell you the following: in general, it is surprising that Steam China did not start years ago. Because everything indicated that this would happen one day. It is strange that this happened only now.

However, even if Global is still blocked, then Chinese players will always find a way around the ban – whether it be a VPN or something else. They have invested too much time and money in this platform.

Daniel Ahmad

Analyst Niko Partners


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