China’s Game Industry Faces Massive Layoff Risk

Chinese media outlet Red Star Capital Bureau reported on Tuesday that well-known game developers, including NetEase, Lilith Games, and IGG, have either curtailed development of in-house game projects or have laid off staff.

According to a source from Lilith Games, the company did cut off the company’s 2D game project named “Eden”, and employees of the project have been transferred to other departments. “Eden” is still under the R&D stage and has not been officially launched. The source mentioned that the reason for being shut down may be due to the delayed issuance of game registration numbers.

Many game developers, including X.D. Network, Kuaishou, Bilibili, Tencent and NetEase, have seen their stock prices drop considerably. According to a Jiemian News’ report, the incident may be related to a rumor that no new game registration numbers will be issued in 2022, though the National Press and Publication Administration has indicated that it is still receiving applications for game registration numbers as usual.

An employee from NetEase Games said that as early as August 2021, after the report about tightening the game registration number, some projects in Hangzhou and Guangzhou had been suspended. Most employees had been transferred to other teams, and a small number of employees chose to leave the company. The source said: “The company made an overall evaluation of these projects and chose to put an early stop to their losses.”

IGG’s internal staff also confirmed the news of layoffs: “The departments in Shanghai and Fuzhou have laid off some staff, but the projects overseas have not been affected,” the employee mentioned. “Layoffs are normal in the current game circle.”

Further, insiders of NetEase, Lilith Games and IGG all said that overseas business will be the main development direction of domestic game companies in the future. According to data released by Sensor Tower, a total of 34 Chinese manufacturers made the Top 100 global mobile game publishers’ revenue list in January, with total revenue of about $2.1 billion, accounting for 35.6% of the global mobile game publishers’ revenue.

SEE ALSO: Sensor Tower: 34 Chinese Companies Among Top 100 Revenue-Generating Mobile Game Publishers