China’s game approving authority, the State Administration of Press and Publication (“SAPP”), formally launched its new rules and guidelines (“New Rules”) on game censorship and approval in this April, following an almost 10-month approval freeze since March 2018 and granting approvals to more than 1,000 titles after the approval resumption since December 2018.

These New Rules, though not formally legislated yet, send a clear message to the industry that the game approval regime has entered into a new chapter, as set forth in greater details in below:

I. Split of Duties between SAPP and MCT on Approval and Enforcement 

The split of the duties and authorities between the SAPP and the Ministry of Culture and Tourism  (“MCT”) on regulating online games is reportedly clarified with the release of the New Rules. That is, the SAPP, as the sole game approval and administration authority, is in charge of granting game approvals as well as the supervision of game operation, while the MCT is responsible for law enforcement. Though such division of the authorities’ roles is yet to be officially announced, we are of the view that it is highly likely the case. As the result of government reshuffle in March 2018, the SAPP under the Propaganda Department of the CPC Central Committee is now in charge of the censorship of a wide range of publications, in contrast, the MCT is more like a law enforcement body that takes enfocement actions according to the SAPP’s decisions. As such, the previous dual approval system requiring two separate approvals from both the SAPP and MCT before the commercial lauch of a foreign game no longer exisits.

II. More Flexibility on Recognition of Foreign/Domestic Games 

Previously, the SAPP (or its predecessor) adopted a quite broad interpretation of “foreign copyrighted games” that not only covers games developed by foreign parties (including foreign-invested enterprises incorporated in China) but also captures those developed by domestic parties based on or using storylines, artworks or other content licensed by foreign content providers. In other words, as long as the game content is not entirely owned or controlled by domestic parties, such game will be regarded as a foreign copyrighted one and may be subject to stricter scrutiny. However, under the New Rules, the SAPP seems taking a less rigid and more flexible approach on the standard of domestic games. In particular, if any foreign content is licensed to a Chinese company, on an exclusive basis, to develop and operate a game for a long enough period in multiple territories including China, such game may be possibly recognized as a domestic title. If so, it may greatly simplify the document preparation and expedite the entire approval process. In case the game in question falls under the scope of causal mobile game, it might be eligible for the fast track approval process applicable only to qualified domestic mobile games.

III. No Full Visibility to Quota Mechanism

It is explicitly stated in the SAPP’s approval requirements that it will control the total number of approved games in connection with its overall planning. However, no further details have been formally disclosed with respect to how this quota is determined an adopted, as well as how to implement the quota mechanism. It was said such quota may mean that certain genre of games will no longer be approved, such as poker games which constituted a major part of approved games during the past years. It remains to be seen whether more clarity will be provided in this regard to guide gaming companies to formulate their roadmaps.

IV. Operator’s Track Record and Its Game Launch Plan Matter 

More information about the game operator’s business will be required in the application documents, including how many employees it has, when it was established, when it started game operation business, the games currently being operated by it and when it plans to launch the game in question. In addition, the game licensing and operation agreement entered into between the operator and developer should be submitted. Moreover, if the game launch plan is significantly postponed after the approval is granted, the operator shall inform the SAPP in due course with specific reasons to justify the delay, otherwise the operator’s other game applications might be negatively affected. This indicates that the operator’s track record and game launch plan will also be taken into consideration by the SAPP. If the operator fails to launch one or more approved games without providing timely and reasonable explanations, such failures may tarnish its credential and even bring negative impact on its future applications. Such New Rules may direct game operators to apply for the approval until they have concrete game launch plans in place.

V. Content Review is No Longer a Formality 

The self-review of the game content by the editor team of the approval applicant, an Internet Publishing License holder that works with the game operator to apply for the approval, was once widely regarded as a formality forming part of the red tape to acquire the approval. However, it is no longer the case under the new regime as the SAPP specifically requires editors to be personally responsible for the games they reviewed and provide more details regarding the examination process, including how much time they have spent on reviewing the game, what kind of non-compliance issues have been spotted and what amendments or improvements have been made by the game developers and/or operators. In addition, editors shall sign the application form to indicate their personal involvement in and the potential liability for the submitted game content.

VI. Foreign Title’s Oversea Operation also Count 

For a foreign game, its overseas operation situation, including when and where it was first commercially launched, territories it is still in operation, how the game is rated in other territories and its total user number, revenue and social impact must be provided. These factors are also likely considered when the SAPP evaluate the game.

With China’s game censorship regime moving into a new phase, we expect the regulators will promulgate corresponding new regulations and/or abolish obsolete regulations to solidify the legal foundation of the New Rules and guide the practices of gaming companies. In addition, some ambiguities and uncertainties are anticipated to be clarified when more games are approved under the new regime. All these will hopefully help to form a robust industry that not only generates more revenue but also produces more high-quality content.