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EA, Take-Two and Ubisoft shrug off China games crisis

Analysts expect China's big games companies to invest further in Western firms

The biggest video game publishers in the West have shrugged off concerns about Chinese video game approvals.

China hasn't approved new games for release since March amid concerns about the amount of time consumers are playing online. The move is designed to curb the number of games that are released.

The situation potentially impacts games companies big and small globally. Big Western publishers such as Ubisoft, Activision, EA and Take-Two have targeted China as a key growth area for their businesses, with some of them creating specific titles for the region's gamers. However, speaking around their financial results this past month, theses businesses are confident the situation will right itself by the time they launch their next big games in the territory.

"We already had NBA 2K approved in China, so in terms of our current operations, the shutting down of approvals have not affected us," CEO Strauss Zelnick told Gamesindustry.biz. "Naturally China is very important to us strategically, and we are looking forward to the time when the approval mechanism is reinstated.

"I think it will be fine over time. China remains an enormous growth area for us as a result."

EA is equally unconcerned, stating that FIFA Online 4 and FIFA Mobile were already approved for release, and that their next title for China is 'some way off'.

"We expect to see large Chinese publishers take a more global approach with both self-developed titles and partnership titles"

Daniel Ahmad, Niko Partners

"Our understanding is it's more of a backlog problem than an actual not really approving games," says EA's CFO Blake Jorgensen.

"I think as they changed agencies, the backlog built up fairly quickly. So we don't see that as an impact for us, at least in the next year or so, as we focus mainly on FIFA."

Ubisoft CEO Yves Guillemot reminded investors that Rainbow Six: Siege is already selling in China, and that the company is generating a lot of revenue from the territory. He adds that although the lack of approval might cause some downsides long-term, it's not an issue right now.

"The impact of launching or not launching the game will not be a major effect," he said, answering a question during the firm's financial QA&. "We are working to make it happen. We can't tell you exactly when it's going to be released."

Indeed, there is a key difference between 'selling' in China and 'releasing' in China. Chinese gamers have taken to using Steam - despite it not being an approved distribution platform - and this has been a boon to many developers and publishers. Although officially releasing in the region will likely have a far bigger impact commercially, Western companies are not completely without a means of selling their products in the territory - with some 30 million Steam users in the market.

The one business area that is likely to be harmed the most by the lack of Chinese game approvals are studios based within the region itself. Niko Partners analyst Daniel Ahmad tells Gamesindustry.biz: "We expect smaller Chinese developers to be impacted by the temporary game license approval freeze. Many of these smaller developers rely on a constant release of games to stay afloat. Without being able to release new games it becomes increasingly harder for these companies to stay in business. We expect further consolidation of the market."

As for the bigger Chinese firms like Tencent? The expectation is that they'll continue to expand further into the West, with more investment in Western developers and publishers to offset any uncertainty in their home market. Indeed, it makes wise business sense for China's gaming giants to expand their global operations so that they're not dependent on the whims of Beijing. Therefore, the impact of China's current lack of game approvals may have an unexpected positive impact upon Western games studios.

"We expect to see large Chinese publishers take a more global approach with both self-developed titles and partnership titles," concludes Ahmad. "We recently saw NetEase form a joint venture with Mattel and a partnership with Bungie to create and publish games for the both the Chinese and overseas audience."

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