China online game investor-ban adds new hurdle for operators

CHINA HAS BANNED foreign investment into its online gaming industry.

China’s video game industry regulator and copyright watchdog the General Administration of Press and Publication (GAPP) issued a circular on Saturday prohibiting foreign investment in domestic online gaming operations through joint ventures, wholly owned enterprises and cooperatives.

The new directive also bans foreign firms from indirectly influencing Chinese gaming firms through agreements or technology support.

China’s online gaming market is one of the world’s fastest growing, with sales expected to rise 30% to 50% this year to Yuan24bn to Yuan27bn (US$3.5bn to US$4bn) according to GAPP.

Chinese game developer NetEase.com earlier this year won the license to operate within China Activision Blizzard’s blockbuster game, World of Warcraft.

Their tie-up ran into problems with regulators who were concerned about their joint venture for Blizzard to provide technical support to NetEase.

While the ban does not refer to online gambling specifically, which is already banned, it presents a further obstacle to any future legalisation. As reported on EGRmagazine.com, Austrian Power 50 top operator Bwin entered the online gaming market via a deal with massive multiplayer online game (MMOG) provider United Games last month, seeking to position itself in Asia via that continent’s massive MMOG market.

PartyGaming chief executive Jim Ryan, by contrast, recently said that Party would de-focus on Asia and re-invest resources in preparing for the US market to re-open.

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