New SAPP rules to lower video game approvals, but impact on industry revenue limited

China’s top video game regulator, the State Administration of Press and Publication (SAPP) began accepting new game approval submissions on Monday after a two-month hiatus, while implementing a new and more detailed approval process, according to game media outlet GameLook.

The new requirements were initially disclosed in a post from the official WeChat account of Yifan Publications, an agency that helps game companies apply for approvals. As of writing, the agency has taken down the article, and there are no updates about the new requirements on the website for State Administration of Press, Publication, Radio, Film and Television (SAPPRFT), the government body that SAPP replaced. In the absence of its own website, SAPP uses the website of the now-defunct SAPPRFT to send out notices.

While not yet officially confirmed, the new rules were reportedly released by SAPP on Apr. 10 during a gaming conference. They were later conveyed to game approval agencies like Yifan and game companies on Apr. 16 by local gaming regulators.

Under the new approval process, SAPP will limit the number of games that receive licenses. Titles that “lack cultural value” or “blindly imitate others,” as well as those that are “excessively entertaining” will be rejected. Also targeted are games that often contain gambling features, including poker and mahjong games, which account for 37% of the 8,561 games approved in 2017, according to a report from game research firm Niko Partners. The restrictions, however, only apply to new applicants.

The Niko Partners report estimates that around 5,000 games will be approved in 2019 under the new rules, but according to analyst Daniel Ahmad, the lower number of approved titles will have a limited impact on the revenue of the industry. “We expect to see revenue growth this year as demand from gamers has not wavered over the past year,” he told TechNode. “Legacy titles are more successful than ever and we’ve seen new games find success at launch.”

While large gaming companies are likely to benefit from the change since they don’t rely on low-quality titles and can root out some competition under the new rules, small and medium-sized developers that rely on quick launches and the occasional copycat game could be take some serious hits, Analysis analyst Dong Zhen told TechNode.

Mini games on WeChat are also required to acquire approvals like other digital games. Previously, these games were able to skip approvals if operated by individuals. But WeChat notified mini game developers on Apr. 18 about the new rules, stating that the platform will no longer approve games operated by individuals. The notice also urged developers to change the operators of their games to businesses within 10 days.

According to GameLook’s report, the approval process will “tilt toward original high-quality games,” but guidelines for “high-quality” and the specifics of “tilt” are not explained. “Games that focus on traditional culture will have a higher chance of being approved and will usually be prioritized,” Ahmad explained.

Also updated are some specific requirements about game content. Another rule that discourages gambling, game applications must specify how many attempts on average it takes for players to get certain items from loot boxes—virtual boxes bought with money that can be redeemed for random items in the game, according to two screenshots from Yifan’s original WeChat post.

Other approval guidelines appear to further guard against violence. No depictions of fluids, including blood of any color, can appear in a game’s combat system, the new rules said. Tencent’s battle royale title “PUBG Mobile,” for instance, changed the color of blood in the game to green to circumvent previous requirements. Bodies of defeated enemies also need to disappear as quickly as possible according to the new rules.

Another requirement goes into minute detail, stating that the marriage feature between in-game characters should be locked for underage players. It suggested that games could devise a system that gives players benefits of in-game marriages without having them go through the process.