Epic Games Will Not Sell Fortnite in China Over Porn, Violence Concerns

Epic Games is not given to death sentences.

After selling more than $1 billion worth of its flagship Fortnite, the company, best known for games like Warcraft, has announced it is suspending sales on China’s Tencent, the company said in a report this month. While Fortnite is officially meant for ages 13 and older, there are thousands of players under the age of 10 in China.

In recent months, China has cracked down on what it believes are hazardous depictions of women and “harmful to minors.” Earlier this month, the government banned the activity of flipping smartphone screens while driving. The restrictions have been set by a Communist Party body that runs the country’s internet, a notoriously hierarchical and arbitrary control network.

The driving distraction ban led to a huge incident last week when members of the media and other characters at a convention were urged to keep their devices inside the venue for safety reasons. Fortnite has reportedly garnered hundreds of millions of players worldwide but China’s interest has been more limited.

However, the recent crackdown on promoting violence, violence against women and pornography does not prevent companies, if they choose to, from selling China-native versions of their global games.

Epic Games also hopes its decision not to sell Fortnite on Tencent’s platforms will be viewed as good economic news.

“We’ve decided not to continue selling Fortnite on Tencent platforms given our ongoing discussions with Tencent about the terms of our future cooperation,” Epic Games’ statement said.

Epic Games would not comment on the financial terms of the Tencent deal, other than to say it was a “multi-million dollar deal.” But analyst firm IHS Markit said that for the company to keep its Fortnite stronghold in China the deal would have been worth at least $17 million.

Epic Games estimates that the average-earning per-user for each Fortnite player in China is $624 per year. But gamers in China tend to spend the largest share of their income on video games, said Ted Warren, assistant director for market research at Newzoo. “Even if they lost 15 percent of the revenues, that can be really disconcerting to them,” he said.

The company also explained why it chose not to sell Fortnite on Tencent rival Alibaba’s VLC games platform, which accounts for a third of China’s market for streaming games. It’s due to issues with how games will be distributed and could not provide more details, according to a press release from the Shenzhen-based company. Tencent accounted for more than 50 percent of the online games market in China in 2018.

Tencent did not immediately respond to requests for comment. Earlier this year, it announced it would invest $386 million in a video streaming platform founded by Santa Clara-based PopCap Games.

China is a key market for games. While it has a growing middle class, there are still very few people in the country who are gaming — much less are playing for money.

Asia’s two largest players, Japan’s Nintendo and South Korea’s South Korean game maker, South Korea’s YG, have largely missed the opportunity to leverage their presence in China. And those companies are far less concentrated in the region than Epic Games.

Tencent — owner of Riot Games — is also far more concentrated in games, not entertainment. “Tencent, right now, is more focused on games than entertainment,” said Warren. “It has a lot more pressure right now to become the No. 1 entertainment player in China.”

“I’d guess that they have more to lose if it looks like they’re backing down,” he added.

Peter Csathy, the founder of Manatt Digital Media, which advises media and entertainment companies, predicted that foreign companies — particularly of games — will find ways to sidestep the current crackdown.

“I don’t think there will be a total break of tension between the state of China and the open market,” Csathy said. “I don’t know if that will be a total short-term thing. I think there’s one thing people need to recognize, and that is that a heavy-handed and highly visible, ham-fisted crackdown on any entertainment will not take China down the path of Japan, because the Chinese are great admirers of Japanese achievements.”

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