China's Strict Gaming Regulations Stunt Nation's Esports Growth



China's strict gaming regulations are stifling esports growth throughout the nation. China has a total of $6 billion in registered users and an estimated annual revenue of around $800 million, according to analyst group Niko Partners. The Chinese market produces a considerable amount of revenue for esports companies outside the country— Tencent Holdings Limited reported that they made over $1 billion in revenue in 2015. The Chinese market is dominated by PC gaming, but consoles are available for purchase within the country. There are 60 million active internet gamers within China's borders, with almost half of these individuals playing games at least three hours per week. Almost every citizen in the nation plays online games at some point, however most do not make in-game purchases. Most top esports titles are hosted exclusively on PC, leaving console gamers to play games like FIFA 16 and Battlefield 4.


China's love for the MOBA genre is well documented; its title across all gaming platforms has been League of Legends since 2014. Riot Games' game was exclusive to China at launch, making it the most popular game in the region. The game is free to play, but with persistent in-game microtransactions that net Riot Games over $1 billion annually. As is typical of Chinese gamers, League of Legends has a relatively low average time played at only eight hours per week (compared to Dota 2's 58). This is understandable when you consider that the game has an 82 percent female player base. Players are apprehensive to spend money on games that are sub-par, making League of Legends a fairly expensive title to play at $1.32 per hour. While hundreds of employees work tirelessly on the game's continuous development, Riot Games receives its fair share of complaints from players unhappy with changes.


China's esports scene is heavily regulated by the country's Ministry of Education, who determines which games are allowed to be played competitively. All game developers must obtain a license from the ministry before its game can be used in any official capacity. The ministry has chosen not to renew Perfect World's license for Dota 2, preventing the game from being played in any official capacity. The license was not renewed because the Ministry of Education believes that Dota 2 is too violent for their standards, even though Perfect World made significant changes to the game. The company removed blood effects and toned down overly gory characters like Pudge in order to meet Chinese regulations, but it wasn't enough. This means that Dota 2 events hosted in China are not regulated by the Ministry of Sports, and cannot qualify players for The International. Competitions held within the country can still be streamed, but must be approved by regulators seven days before its commencement.


China's Ministry of Education also has a negative impact on the nation's mobile games market. Tougher regulations have kept many mobile games companies from entering the Chinese market, meaning that global players like Supercell are not able to operate within the country. This is due to strict regulations set forth by China's State Administration of Press, Publications, Radio, Film and Television (SAPPRFT), which prohibits foreign investments in multi-player mobile games. These rules are in place to protect Chinese developers, who face intense competition from the international market. Because of these regulations many foreign mobile developers have turned their attention to Vietnam's growing mobile game industry instead.


Tighter rules also apply to esports athletes themselves, with specific restrictions set on foreign players who participate in tournaments hosted within China. These athletes must be members of a certain athletic association, many of which do not recognize esports as a legitimate sport. This means that foreign athletes must obtain "proper" visas for China if they want to legally compete at tournaments hosted in the country. Many of these players are forced to travel on individual or team tourist visas instead, which can be restrictive and even dangerous depending on the visa's stipulations.


The Chinese government's refusal to accept Dota 2 and mobile esports seriously has had a direct impact on the nation's gaming culture as a whole. Forcing tournaments to be hosted outside of China severely hurts fan engagement, with less incentive for tournaments to build hype with announcements and streams. The International and many other premier titles will not be held in China because of these restrictions, and multinational companies like Riot Games will likely continue to face difficulties when attempting to innovate within the Chinese market. There are positive steps being taken in order to legitimize esports in China, but it is clear that they still have a long way to go before their culture is comparable with that of other leading nations.

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