China’s adventuring heroes can hack their way through armies of monsters, but even they are powerless against massed bureaucrats. On November 2, the General Administration of Press and Publication (GAPP) pulled the plug on the popular online game World of Warcraft (WoW). Suddenly millions of young men were faced with the bleak prospect of exile from the imaginary world of Azeroth.
The ban on WoW capped several bad months for China’s online gamers. In March GAPP toughened licensing requirements for foreign games. This was followed by the Ministry of Culture (MoC) in July saying it would outlaw games that "glamorized gangs." From August onward, GAPP ramped up its crackdown on foreign involvement. It closed down 45 "unapproved foreign games" and then in October issued a circular starkly reminding everyone of the rules.
Operators and publishers of foreign games in China have always had to negotiate a difficult mix of content and commercial restrictions designed to foster a "civilized internet" and coddle local developers.
Eye of the storm
WoW, owned by international game giant Activision-Blizzard and the most popular game in China for some years now, is at the eye of the regulatory storm. In a major industry realignment last April, Activision-Blizzard pulled its license from online game company The9 and gave it to competitor NetEase.
Two years ago, regulators delayed a major WoW upgrade, declaring its animated skeletons incompatible with Chinese culture. A new upgrade has been similarly afflicted. The latest round of rumblings, which extends back to at least July, came to a head in September when NetEase switched from testing to commercial operation. GAPP was quick to drop the hammer, declaring the game improperly licensed.
Enter an unlikely hero in the form of the skeleton-vanquishing MoC, which shares responsibility with GAPP for licensing online games. Shortly after GAPP announced its ban, the ministry publicly slapped it down for shutting down a game that MoC had approved.
The dispute is set to escalate all the way to the State Council. You could be forgiven for thinking that they have bigger things to worry about than WoW, but the case has little to do with the game itself.
Online games have long occupied a gray area between several regulators. WoW touches all of the cultural and foreign live wires, making it a useful proxy in the struggle to chart the future of US$3.5 billion industry growing at more than 30% a year.
In this environment, concerns over foreign influence seem like a pretext for asserting regulatory hegemony. Seven of the top 10 games in China are domestically produced, and local heavyweight Tencent is the industry leader. WoW is the most popular game, but it accounts for less than 2% of the country’s online game revenues.
Many industry leaders are already foreign-invested, raising doubts about the enforceability of GAPP’s rules. But the agency has long had authority over foreign publications and is fighting with the weapons it knows.
Who’s the daddy?
Regulatory turf battles over emerging technologies are common, especially around the internet, which spans business, technology and media, and gives rise to vast, new industries. A similar struggle occurred two years ago over video sharing between the State Administration of Radio, Film and Television and what is now the Ministry of Industry and Information Technology. There were fears that top companies would go under, but in the end a working model was sorted out and everyone got back to business.
Or, almost everyone did. Unfortunately, Chinese regulatory battles over emerging technologies are like ponderous giant-monster fights over Tokyo. There is lots of radioactivity and innocents inevitably get stomped.
China’s online game industry will charge ahead, and even extend into overseas markets. Tencent and other Chinese developers are already hiring in the US. At the same time, foreigners are too entrenched to dislodge in post-WTO China and will continue to play an important role in the industry.
With MoC’s blessing, WoW will probably also be back. But it remains a convenient regulatory scapegoat, and as long as the regulators struggle, it is at risk. More dark days may lie ahead for the heroes of Azeroth.