China approves 154 games in May, boosting Tencent and NetEase

China's game regulator approved 154 domestic titles in May, including games from Tencent and NetEase.

China's National Press and Publication Administration approved 154 domestic online games in May, including titles from Tencent Holdings Ltd. and NetEase Inc., the latest monthly batch that signals continued regulatory support for the sector.

The approvals included "Chasing Kaleidorider," developed by a Tencent studio, and "Ghost Shadow Blade" from NetEase, according to the NPPA's official list published Tuesday.

The 154-game tally marks another sizable monthly batch from the regulator, which has maintained a steady cadence of approvals after resuming regular issuance. Tencent and NetEase, China's two largest gaming companies by revenue, have consistently appeared on approval lists in recent months, a shift from the 2021-2023 period when license approvals were sporadic and heavily restricted.

The sustained approval flow reduces the regulatory uncertainty that weighed on China's gaming sector during the crackdown, when the NPPA froze license issuance for months at a time and introduced strict rules limiting minors to three hours of playtime per week. For Tencent and NetEase, a predictable release calendar supports their ability to monetize new titles through in-game purchases, the primary revenue model in China's mobile-dominated gaming market, where smartphones account for the majority of player spending.

Short-selling data as of May 26 showed $939.48 million in Tencent short positions, representing 6.551% of turnover, and $615.21 million in NetEase shorts at 26.152% of turnover, suggesting divergent positioning between the two stocks. The higher short ratio for NetEase may reflect market expectations that Tencent's broader game portfolio benefits more from the approval pipeline, or positioning ahead of specific title launches.

The gaming sector's regulatory outlook has improved as the NPPA has maintained a steady approval pace. The latest batch of 154 games follows similar-sized monthly approvals, providing publishers with greater visibility on their release schedules. Both Tencent and NetEase have expanded their overseas operations to diversify revenue, though domestic approvals remain critical for their China-focused titles. Tencent, the world's largest gaming company by revenue, operates titles such as "Honor of Kings" and "PUBG Mobile," while NetEase's portfolio includes "Fantasy Westward Journey" and "Egg Party." The new approvals add to their pipelines: "Chasing Kaleidorider" targets the action-adventure segment, while "Ghost Shadow Blade" expands NetEase's presence in the martial-arts genre, both categories with strong domestic demand.

China's gaming market, the world's largest, has shown resilience as regulatory conditions have stabilized. The NPPA's monthly approval system now provides a clearer framework for publishers to plan releases, a contrast to the ad-hoc freeze periods that disrupted the industry between 2021 and 2023. For investors in Tencent and NetEase, the steady approval cadence removes a key overhang that previously weighed on valuations.

This article is for informational purposes only and does not constitute investment advice.