China gaming ban: Fortnite is shutting down due to Tencent’s failure to get a license for the wildly popular shooting game
- US games developer Epic Games said that it is ending its three-year ‘testing’ of Fortnite, its massively-popular shooting game
- Nexon, a Japanese-Korean game studio, announced that it would launch DnF Mobile in South Korea, with no mention of China date
Global hit games Fortnite and the Dungeon & Fighter (DnF) Mobile have hit the pause button on China, the world’s largest gaming market, as it has become increasingly hard to get Beijing’s approval for their release in the country.
US games developer Epic Games said on Monday that it would end its three-year “testing” of Fortnite, its massively-popular shooting game, in China on November 15, as local partner Tencent Holdings has been unable to get a licence to officially launch the game in the country. In the current “testing” mode, Tencent is banned from charging players.
Meanwhile Nexon, a Japanese-Korean game studio, announced on the same day that it would launch DnF Mobile in South Korea. Tencent, also a key partner for Nexon, had planned to launch DnF Mobile in China in August 2020, but the plan appears to have been blown off course as Beijing has tightened its control over game licensing and content.
Epic’s decision to end testing in China and Nexon’s move to skip the market - for now - mean that Tencent, the world’s biggest gaming company by revenue, may have just lost two of its most anticipated – and likely profitable – titles as Beijing ups its regulatory pressure on the industry. China’s gaming regulator has not issued a single new game approval since the end of July, leaving many gaming companies in limbo.
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“The news that Fortnite, at least for now, is pulling the plug on China and that DnF Mobile is launching in Korea without a China launch date, reflects the difficult state of game approvals right now in China,” said Matthew Kanterman, senior analyst at Bloomberg Intelligence. “These were both among the high profile games that Tencent was set to bring into China.”
Tencent declined to comment on Tuesday.
Outside China, Fortnite has around 80.4 million monthly active users, as revealed by a US court document in June 2020. Fortnite generated US$9.1 billion in revenue across 2018 and 2019, according to another US court document. Tencent signed a deal with Epic Games, in which it has a 40 per cent stake, to publish the game in China back in 2018.
DnF Mobile was also seen as a good bet after the PC version of DnF, which Tencent first published in 2008 in China, contributed about US$7 billion to the Chinese internet giant over the past two years – accounting for about a quarter of Tencent’s total PC game revenues.
Meanwhile, there is little sign that Beijing is about to resume game approvals any time soon. Bloomberg’s Kanterman said the “barren run of a lack of new licenses issued” could persist for a while as the priority for the Chinese government right now is to implement new industry rules and the requirements for existing titles.
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Mio Kato, founder of Asia-focused LightStream Research, said that foreign game developers like Epic Games are now being forced to rethink their investments in China.
“The fact that Epic is willing to walk away after such a testing period either means China is now closed for business to games or that Epic did not feel that investing in changes to meet regulatory requirements was worth it,” he said in emailed comments to the South China Morning Post.
Beijing has identified gaming addiction among minors as a major social problem that must be fixed.
The government tightened regulations significantly in September when it capped gaming time for minors to three hours a week only, to between 8pm and 9pm on Fridays, Saturdays, Sundays and statutory holidays. Scrutiny of gaming content – especially that deemed to be harmful such as excessive gore and violence – has also been stepped up.
“It’s increasingly clear that regulators [in China] mean business,” said Kato.
