It makes sense that Chinese gamers weren’t very amused when a hidden insult aimed at China’s President Xi Jinping showed up in the hit Taiwanese game Devotion earlier this year.

But now things are reaching a whole new level: The Chinese government revoked the business license for Devotion’s Chinese publisher, Idievent, saying the company “engages in illegal activities that endanger national security, social and public interest.”

The government announced the penalty in a document issued at the end of May, but that only recently became publicly available. Some publishers are now worried about what this means going forward.

Luis Wong of game publishing company Indienova said that this incident “definitely marks a precedent” for a game publisher to be sent to the chopping block for simply distributing questionable content.

Another Indie CEO Iain Garner echoed that sentiment. He said the death sentence of Indievent has signaled to the rest of the industry that China’s government under President Xi Jinping is much more willing to punish game publishers.

(Notably, only the game publisher, responsible for distributing the game, has been targeted in this case. The game developer in Taiwan, which actually created the game, is outside of China’s jurisdiction.)

Part of what makes this move so alarming is that China has rarely gone after games that are sold on Steam, which operates in a legal gray area: It’s not officially in China, but it’s not blocked either. That means Chinese gamers can access a wide range of overseas games not normally available -- and completely untouched by local censors.

It has long been a vital service for Chinese gamers and the industry alike. But now the government is seemingly willing to go after local companies on Steam.

This is why Garner, whose company is also based in Taiwan, said that Indievent should have been more careful about vetting Devotion given the tricky situation in a market like China.

“Indievent clearly missed something during their quality assurance and this is the result,” he said.

Garner did acknowledge that this is a difficult task, though.

“It's almost impossible to check every asset and it only takes a small mistake for something to be added to a build or for a Steam branch to be made public,” he said. “We have pretty strict control measures to avoid this but human error is always a factor.”

But what could possibly get the Chinese government so worked up about a horror game, anyway?

Just days after the release of the popular title from Red Candle Games, players found the game had a hidden insult aimed at Xi Jinping. It mixed a Taiwanese dialect and Mandarin written in unusual fonts, which basically reads, “Xi Jinping Winnie the Pooh moron.” (Winnie the Pooh is often used as a caricature for Xi Jinping, and the cartoon character has been blocked on social media and in games).

The red seal itself says “Winnie the Pooh Xi Jinping.” The four characters around it mean “moron” in a Taiwanese dialect. (Picture: Red Candle Games)

Obviously, this didn’t go over well with Chinese gamers, who soon launched a wave of review bombs on Devotion’s Steam page. Merely four days after the game’s launch, Devotion’s Chinese publisher Indievent issued a public letter and severed ties with Red Candle Games.

Apparently Indievent’s prompt action wasn't enough to exonerate the Shanghai-based company. Public records show that Indievent didn’t issue an appeal against the government charges.

The fallout with Red Candle Games wasn’t limited to Indievent. Taiwan-based Winking Entertainment, which was in charge of publishing Devotion outside of China, also cut ties with the game developer shortly after the incident. Garner said this move was likely out of consideration for the gaming industry in Taiwan, which gets a significant amount of funding from China.

As a result, Devotion was pulled from Steam just days after its launch and hasn’t been available since.

Indienova’s Wong said games should stay away from any political red lines if they want to be officially released in China. But that’s what makes this case surprising: Devotion was never officially released in China. It was on the global version of Steam.

And that means, as shocking as this move may have been, there have been warning signs. Garner said China has been significantly tightening its control over content in recent years.

“In the last couple years, the Xi government has made control of entertainment a priority as China has gone from the Wild West to 1984 in a very short time,” he said. “The games industry has been operating through a loophole but that loophole is closing fast.”