China's Freeze on New Videogames Begins to Thaw

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A visitor playing the ‘World of Warcraft’ online game at an expo.

A visitor playing the ‘World of Warcraft’ online game at an expo.


Photo:

sherwin/European Pressphoto Agency

BEIJING—Chinese regulators set up a new committee to review online games, in a step videogaming industry executives and consultants said presaged an end to a crippling freeze on new game approvals.

State media reported the new “online game ethics committee” on Friday, and industry executives said the news caught them by surprise. Regulators haven’t approved the sale of new titles since March, after a state media campaign that criticized games for being too violent and addictive for young people. The intervening freeze has battered the bottom lines and shares of videogame companies, including

Tencent Holdings
Ltd.


TCEHY 0.69%

, the industry behemoth.

The ethics committee, which falls under the Communist Party’s Propaganda Department, will review games for content and set out guidelines for companies on how to “abide by social morality,” according to a Friday report from Xinhua News Agency.

The committee has already reviewed 20 games, requesting modifications to 11 titles and rejecting nine for improper content, Xinhua said. State broadcaster China Central Television also reported on the new committee.

A public announcement of a new review process is a sign that regulators are making some progress toward restarting game approvals, said Mark Natkin, managing director at Marbridge Consulting in Beijing.  “At least one among them has started to provide some kind of review of games,” said Mr. Natkin.

The Propaganda Department didn’t respond to a request for comment, nor did Tencent. Another games giant,

NetEase
Inc.,

declined to comment.

Videogaming on mobile phones has boomed in China. Its popularity, however, has set the industry in the sights of President Xi Jinping’s government, which has tightened scrutiny over the internet and called for content promoting the Communist Party.

The freeze on new titles started during a government reorganization, and videogame makers originally expected approvals to restart this fall. Now, many believe that it won’t resume until at least March, after the annual session of China’s legislature.

By one researcher’s estimate, the freeze has cost the game companies roughly $200 million a month in lost revenue.

Tencent and NetEase, which made billions by developing games such as “Honor of Kings” and importing foreign titles such as “World of Warcraft,” have seen their shares plunge. NetEase’s American depositary receipts slipped about 30% this year. Shares of Tencent have dropped nearly 24%.

Write to Shan Li at shan.li@wsj.com