The decision has battered shares of market leaders like Tencent, which have plunged since the company was ordered to remove hit game "Monster Hunter: World" from sale only days after its debut. Other plans that will bolster the company include a government initiative to turn WeChat into a form of digital national identification. The former is in charge of curating the licenses handed to publishers in order for games to be sold in the country, while the latter is an advocate of tightening regulations even more so than the nation is known for.
"The regulatory headwind is definitely having a toll" on Tencent's gaming revenue, said John Choi, an analyst at Daiwa Capital Markets, noting that the company has not been able to monetize a key title such as PUBG. PUBG was edited to be more sensitive of traditional Chinese culture and "moral" standards, though there isn't any real indication of what the complaints levied against the game it just yet.
The ministries did not respond to requests for comment.
Capcom, a Japanese company, also saw its shares fall by 10 percent, before rising by 2.1 percent the day after.
That comes after what looks to be a wider lockup on videogame approvals in China.
"If they previously didn't get an approval, it seems that there will continue to be a hold on that".
"Motorola P30 with 6.2" Notch Display & 16MP Dual Cameras Launched in China
The device comes in 64GB and 128GB storage options and there is also a MicroSD card slot for further expansion of up to 256GB. It is worth noting that Motorola went out of its way to make this smartphone look eerily similar to the iPhone X .
Deutsche Bank analysts led by Mr Kim Han-joon now expect a 6 per cent drop in mobile gaming revenue in the second quarter from the first, instead of their original forecast for a rise of the same magnitude. "These companies have to be operating in the long-term interests of the Chinese state". Alibaba Group Holding affiliate Ant Financial was initially cheered for providing everyday people and small businesses with easier access to loans and other financial products.
Tencent has been shifting its business away from the gaming industry. Ant suddenly had to comply with new limits set by authorities. This bolt from the blue was a big blow to Tencent and also of concern to investors.
The pace of the company's investment is also slowing. "This is something which is a little bit out of (our) control", said Martin Lau, the company president.
Bureaucratic reshuffling at the top levels of China's government made it hard for the company to get the licensing required to make money on new video games.