Gov't bans foreign investment in online games

China has banned foreign investment in the online games biz as it tightens its grip on the Internet and cracks down on content it deems inappropriate.

So far authorities have shuttered 45 online games alleging they encourage players to engage in illegal activities such as drug trafficking and prostitution, according to the Beijing News.

The General Administration of Press and Publication, which regulates the biz, the National Copyright Administration and the State Office of Sweeping Pornography and Illegal Publications, jointly issued a circular Saturday prohibiting foreign investment in domestic online gaming operations through joint ventures, wholly owned enterprises and cooperatives.

It also said domestic operators of online game services or publishers of games that will be based on the Internet must now be approved by the media regulator.

The directive forbids foreign firms from indirectly influencing Chinese gaming firms through agreements or technology support.

In July, the Ministry of Culture outlawed games that feature gangster themes or mafia-type gang activities.

China’s online gaming market is one of the world’s fastest growing, with sales expected to rise up to 50% this year to $3.5 billion-$4 billion, according to GAPP.

Earlier this year China’s second-biggest online games company,, won the license to operate Activision Blizzard’s blockbuster game, “World of Warcraft,” and bowed it in China in September. It is unclear whether this latest directive will impact that relationship.

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