China is smart to do this. People are far too shut-in these days. Look how much entertainment has expanded and filtered in the niches of everyone's lives. It does not always have a positive effect on individuals (does the news even bother to cover stories of MMORPG recluses any more or is it now to be taken for granted?) and therefore nor does it always have a positive effect on populations.
Consider the effect that a film like "V for Vendetta" has had on activism itself. The iconic Guy Fawkes mask and the anonymized approach to public activism leaked directly from the film into peoples' lives, who took it seriously and decided to implement it in a fashion.
Consider the effect that video games have on what you decide to talk about with people when you're out shopping, or at work, or at school, just "hanging out", and so on. For many people, about the only people they wouldn't talk about their video games with would be their parents, who would grow weary of the subject and try to divert them to something "more productive". And that HAS to be a dwindling case, considering how many life long gamer are now parents of kids old enough to game passionately.
People fall in love with "weighted companion cubes" (despite the dead bodies inside). People spend a great deal of time meditating on whether the cake is a lie or whether there is no spoon.
When you add in a dimension of possible political opinion and conflict to an immersive game, it also adds those political opinions and conflicts to the discussion. With things in China as bad as they are right now, in many districts, it would be a bad idea to entertain people with some game depicting "the day after tomorrow" sort of mayhem that no doubt many of them wish was real today.
Because that is what they would be talking about around the water cooler, or out shopping, or while stocking the coal cellar, or while cooking, or at school. Especially the at school part, that's sort of what China's mostly concerned about. Remember it was students who were active in Tiananmen Square.
Every day, in the United States, I shake my head in shame at how many people are operating in their daily lives on a level of cinema fantasy running through their heads. It's not that they watch too many movies or that the content of the movies is wrong somehow, it's that they take what they've watched far too seriously and for whatever reason they've also adapted it to fit their self image and their perception of what their life actually is.
It's easy to defend these people as "needing heroes", and "needing to be heroes", and so on. But it's not easy to defend people who aren't aware of their surroundings and who aren't concerned with real events and real consequences in real life, no in any sense of the word "defend". And plenty of people -- who don't have self-image and self-esteem issues, or who aren't trying to take reality escapism to a whole different level -- enjoy their hero sagas and their epic struggles as things separate from real life. It's not those people that draw my concern, it's the growing number of others who get completely absorbed and proceed to live in a psychological bubble composed of entertainment imagery.
Case in point, "thug life", which is a cultural mainstream even in neighborhoods where there's no threat of actual gang activity and where there are plenty of opportunities for a better life. It's even a mainstream with little white upper class girls in grade school who obviously aren't going to cap anybody and if they wanted to count stacks they could learn accounting and investment from their millionaire parents. There's something lacking in someone's life besides monetary value and secure social networks, when they emulate being a thug ostensibly in pursuit of money and social standing, even when they have ready access to plenty of both.
It's expensive to get a rich man's money, but, it's cheap to fill a poor man's pockets.