China has had a fractious history with the gaming industry.
Twitch has been banned in China. This is not surprising given China’s record of creating its own localized versions of social media as well as popular websites. China has previously banned Google, Twitter, Amazon, and YouTube. The government keeps these websites out of the country through various legislative actions and technologies, aptly nicknamed “The Great Firewall”. China has replaced these Internet services with their own localized versions of these sites: Baidu (Google), Sina Weibo (Twitter), Alibaba (Amazon) and Youku (YouTube).
The Chinese government seeks to have a firm grasp of all happenings in the country.
The Chinese government has had a complicated history with the gaming industry. While China acknowledges its existence, it seeks to bring the industry under the control of the government. China had previously banned sales of video game consoles from 2000 to 2015 under the auspices that video games had “adverse effects” on Chinese youth. China is also not only the world’s most populous country (although India may rival it in the next decade), but also has the world’s biggest consumer market and the world’s fastest-growing consumer market. Therefore, the government has a vested interest in protecting it from Western-based influences.
Many Western games eventually make its way to China. There are an estimated 500+ million gamers in the country, more than the population of the entire United States. This means that merely having access to this market is guaranteed additional revenue for any developer who makes the effort to conform to the strict regulations placed on the gaming industry in the country.
Did the Chinese government view Twitch as a threat?
Business Insider reported that Twitch surged to the third-most downloaded app as gamers in the country watched the esports championships in the Asian Games. This was not broadcast on state television, another heavily-regulated aspect of Chinese society. The writing was on the wall when Chinese authorities suspended any approval of new games for the market back in August.
This had consequences for not only Twitch but for game developers as well. Tencent, arguably the biggest game publisher in China, lost $140 billion in stock as a result. This is the first time that Tencent has reported a profit drop in 13 years. Looking at the bigger picture, Tencent’s profit drop is also a sign that the once-communist country is moving towards a market-based economy against the will of the Chinese leadership.
China is (at least when gaming is concerned) between a rock and a hard place.
Readers should keep in mind that China only abandoned communism 40 years ago. After Mao Zedong’s death in 1978, his successor, Deng Xiaoping, made economic reforms to Chinese society. This included market-based reforms that turned China into a market economy. However, China is still essentially a centrally planned economy to this day. The term “socialist market economy” is used to describe the Chinese economic system. Elements of capitalism and private enterprise are present throughout the country’s economy with strict government controls. There are two stock exchanges in China in the cities of Shanghai and Shenzhen.
One of the telltale signs of capitalism, McDonald’s, came to the country in 1984. Video games were logically included in the opening to the West. As prices dropped, there was a gigantic surge in consumers looking to experience video games for the first time. In fact, in only 15 years, 11 of the 24 billion-dollar game companies were based in China, showing the region’s growing clout. By keeping companies such as Twitch out of their market, they are looking to free themselves from Western influences.
Whose fault is it anyway?
Older generations in China still have a lot of influence over the country; many Chinese politicians today were starting their careers when Mao was in power. However, younger Chinese are embracing video games; they want to connect with the outside world. This is apparent in the wide usage of virtual private networks (VPNs). Chinese citizens use VPNs to access the Internet beyond the Great Firewall. The “games war” is just a small detail in the big picture of the trade conflict between the United States and China. Changes are necessary on both sides for video game companies to access the Chinese market.
What do you think about the Chinese government banning Twitch? Let us know in the comments below!