Fortnite Game Quits China After Failing to Get Sales Approval – Bloomberg

Hi all, this is Zheping in Hong Kong. Fortnite, one of the world’s hottest video games, has called it quits in China, but first…
Today’s top tech news: 
When I attended China’s biggest gaming expo in Shanghai back in 2018, Epic Games Inc.’s Fortnite was the star attraction. Tencent Holdings Ltd., an Epic investor and Fortnite’s local publisher, set up a gigantic booth for exhibition matches among pro gamers and even wheeled out a real-life replica of the game’s iconic school bus to draw spectators. That summer, 10 million Chinese fans pre-registered to access the battle royale shooter which had already grossed over $1 billion globally in its first year.
But on Monday, after running a trial version of the game in China for three years, Tencent finally shut down Fornite’s servers—without making a dime. I wrote about the specifics of the Fortnite saga in the latest issue of Bloomberg Businessweek. The game’s problem was simple: Its distributors never got the required nod from the government to start selling content or items for the game in the country.
Fortnite’s failure to launch is a warning for companies around the world thirsting for access to China’s $46 billion gaming market. The country’s regulators haven’t signed off on a single new video game release since July, after they called for more scrutiny over gaming content to protect children’s mental health and eyesight. The crackdown is part of President Xi Jinping’s campaign to rein in big tech, which has ensnared industries from education and e-commerce to entertainment and the gig economy.
Initially, Beijing’s crackdown appeared to focus on domestic giants like Tencent and Alibaba Group Holding Ltd., but global players soon felt the pain too. Yahoo and Microsoft Corp.’s LinkedIn abandoned the country in recent weeks because of the mounting hurdles of doing business there, including new rules on cross-border data transfers that went into effect this month.
Another sign of tightening restrictions came this past weekend, when the country’s cybersecurity watchdog proposed a ban on entities or individuals providing tools to spread “illegal” information from overseas, potentially threatening the legality of VPN services to bypass the Great Firewall of China’s internet.
Still, games like World of Warcraft and League of Legends—another Tencent offering—have endured, making them some of the few foreign internet services that are still generating good money in China. Newer titles including Nexon Co.’s Dungeon & Fighter Mobile and Capcom Co.’s Monster Hunter: World have been caught in Beijing’s regulatory maze, which has become more impenetrable since a licensing freeze in 2018.
That’s not to say there’s no workaround to get into the world’s largest internet arena. Tencent, for its part, has garnered hundreds of millions of views by streaming the 2021 League of Legends esports tournament and the franchise’s new anime series “Arcane.” Regulators typically have a lighter control over gaming-adjacent content like music and videos, vs. the games themselves. Fortnite could still have a lucrative future in China: But perhaps as a stage for virtual Ariana Grande concerts, not a third-person shooter. — Zheping Huang
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Google formed a “Fortnite Task Force” in response to Epic’s moves, and which met daily in 2018, according to a lawsuit. 
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