When Tencent recently reported its first quarterly profit decline in more than a decade, executives from the Chinese internet giant blamed it on Beijing’s temporary suspension of approvals for new games. That has helped wipe more than $100 billion off the market capitalization of Tencent, the world’s biggest videogame company by revenue, this year.
At the center of Tencent’s problems is a hot combat game by a South Korean company called “PlayerUnknown’s Battlegrounds”—better known as PUBG. Tencent’s struggles to bring the game to China show the challenges of operating in a country that is at once the largest games market in the world and one of the most opaque, where government approval for games is required. Even for well-connected domestic companies like Tencent, the process can be difficult to navigate and easily stymied by geopolitical tensions.