China is the next battleground for Epic and Steam, but why haven't they been banned?

With no announcement, the Epic Games Store is now available in China.



This week Chinese PC gamers discovered an odd surprise: With no announcement, 
the Epic Games Store is now available in mainland China. Not only can Chinese 
gamers now play Fortnite or buy any of the Epic Store exclusives that were previously 
unavailable to them—often at extremely reduced prices—they even have access to popular 
Chinese payment methods like Alipay and WeChat Pay. But for anyone paying attention to 
China's turbulent relationship with videogames, the Epic Games Store's stealth launch 
in China raises some big questions.

How companies skirt China's censorship laws 

For decades, the Chinese government has enforced strict censorship regulations on its 
videogame market. Consoles, for example, were banned outright until 2014, which explains 
why China's PC gaming industry grew to such an enormous size, with almost as many PC 
gamers as the population of the United States. But every game that is launched in China 
has to first receive approval from a government regulator: The newly formed State 
Administration of Press and Publication (SAPP).



In March of 2018, the State Council froze all videogame approvals after it announced 
a massive restructuring of the previous regulatory bodies overseeing the videogames 
market. That freeze was only fully lifted last month, which has an enormously negative 
effect on China's videogame industry. Tencent, the largest gaming company in China 
(and the world), reportedly lost $190 billion in market value in part because of the 
freeze, while the entire industry was down 2.1 percent from 2017 according to Asian 
games market researchers Niko Partners. Facing disaster, many Chinese indie developers 
found salvation in an unlikely place: Steam.

For years, Valve's marketplace has operated in a legal grey area in China. 
Despite community features like Steam's forums and adult games being blocked 
by Chinese censorship, Chinese gamers can still access Steam and play games 
that haven't received approval for sale in China. After conducting a dozen 
interviews with various Chinese developers, market analysts, and publishers, 
no one I spoke with knows why Steam is able to continue operating in China, 
though rumors abound.

"It's one of the ongoing mysteries of the modern age," Iain Garner told me. 
He's the co-founder of Another Indie, a Taiwanese-based indie publisher with 
extensive experience operating in China. "Everything I know about the Chinese 
government and how they operate and about how they've treated other similar things 
suggests that Steam should have been blocked a long time ago. But it hasn't."  

But the Epic Games Store entering the territory calls into question why the 
Chinese government is taking such a strict stance and outright banning some 
platforms, like Twitch, but allowing Steam, the Epic Games Store, and all their 
uncensored games to remain accessible to consumers.



In Steam's case, many believe it's been willfully ignored up until this point 
because Valve is actively working with Perfect World to release a Chinese version 
of Steam that would abide by Chinese regulations. That's not good news for Chinese 
gamers who fear that Steam China will, like Tencent's own storefront WeGame, 
be heavily censored and have limited range of international games. But, as of yet, 
Epic Games hasn't announced any plans to partner with a Chinese company to 
release a Chinese version of its store—in fact, it seemed outright hostile to the 
issue a few months ago.

During a Q&A event at the Game Developers Conference earlier this year, head of 
the Epic Games Store Steve Allison condemned Steam's operations in China. 
"The way our competitor [Steam] operates offshore is not legal in China, 
and they don’t have an office in China. We have employees there, so we are 
very sensitive to what is legal and what is is not—more for the benefit and 
safety of our staff. We just don’t want to take any risks that can put them
 in any legal fire."

We reached out to Valve for clarity on its operations in China but it did not respond in time to publish this story.