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Tencent plays up 'social value' of video gaming tech as China's regulators continue scrutiny of content the sector creates

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Tencent Holdings, which operates the world's biggest video gaming business by revenue, asserts that the sector's technologies are making a contribution to areas outside online entertainment, including culture, science and traditional industries, even as China's regulators continue their scrutiny of content created by game developers.

Subsidiary Tencent Games played up that theme at its "Spark 2022" online conference earlier this week, featuring a virtual avatar of Tencent senior vice-president Steven Ma Xiaoyi who said there was growing adoption of game-developed technologies in activities beyond the sector's traditional market.

"Game technologies are increasingly used in digital cultural protection, industrial simulation, film production and fields like smart city development," Ma said.

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Tencent Games, for example, highlighted being part of various conservation and restoration projects, including the Library Cave of Dunhuang and Beijing's Central Axis, and even building a digital Great Wall of China.

A range of cutting-edge game technologies are now being applied by Tencent Holdings to various projects outside the video gaming market. Photo: Shutterstock alt=A range of cutting-edge game technologies are now being applied by Tencent Holdings to various projects outside the video gaming market. Photo: Shutterstock>

"As a leader in China's internet industry, Tencent shoulders a bigger social responsibility for using its technology to make a positive impact on society," said Chang Qiaoyu, analyst at LeadLeo Research Institute.

In an unlikely partnership, Tencent said it worked with Shanghai Baosteel Group Corp to apply real-time cloud rendering, motion capture, virtual reality, augmented reality and other gaming technologies to help in the state-owned steel company's digital transformation and increase its manufacturing efficiency.

"The gaming industry is not one that develops in isolation," Ma said. "Along with the continuous progress of technology and the deepening of our understanding, games will play a more-important role in both economic development and social life, creating even greater technological breakthroughs and richer value."

Tencent's sharpened focus on the social value of video gaming technologies in the wider world reflects the company's odd situation at present: it has not been granted any new game licences for about a year.

Industry regulator the National Press and Publication Administration (NPPA) early in June granted licences to 60 personal computer and mobile games, marking the biggest mass approval of new titles since July last year. But no games from Tencent and NetEase, China's two largest video gaming companies, were approved.

The NPPA skipped approvals in May after granting licences to 45 new games in April, which ended an eight-month freeze that was imposed since July last year. Tencent was also excluded from the approvals in April.

China has slashed new game approvals after the sector peaked in 2017, when more than 9,000 titles were cleared for publication and use on the mainland.

In a conference call with analysts in May, Tencent chief strategy officer James Mitchell indicated that the number of new game licences will be fewer, compared to the pre-2018 level, because regulators have prioritised quality over quantity. He said the latest freeze in approvals mainly hurt start-ups because bigger companies like Tencent already had games that "could ride out that period more comfortably".

Tencent's revenue growth stalled in the three months ended March 31, while earnings slumped 51 per cent amid the freeze in new video game approvals.

NetEase said the game, which received a licence in China as early as February and was expected to launch on June 23, needed some improvements. The decision came after the official account for the game was banned from posting on Weibo for "violating relevant laws and regulations".

At its virtual conference on Monday, Tencent Games announced updates on 26 game titles, covering a range of genres including first-person shooter and casual gaming. These include existing titles, such as Honour of Kings, as well as new games like Return to Empire, Code: To Jin Yong and League of Legends Esports Manager - the official mobile game of Tencent's League of Legends tournament, which will start beta testing on the mainland this July.

Among the newly announced titles, LeadLeo's Chang said he is optimistic about Code: To Jin Yong, a massively multiplayer online game based on the Wuxia world of Hong Kong martial arts novelist Louis Cha Leung-yung, known to his readers as Jin Yong.

Tencent Games featured 44 projects at its virtual conference. By contrast, there were more than 60 such projects announced at last year's event.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.