The correct answer is C. are playing.
The sentence is in the present continuous tense, which is used to describe actions that are happening right now. The other options are not in the present continuous tense.
A. play is in the simple present tense, which is used to describe actions that happen regularly or repeatedly.
B. will play is in the future tense, which is used to describe actions that will happen in the future.
D. is playing is also in the present continuous tense, but it is singular, while the subject of the sentence is plural.
Therefore, the correct answer is C. are playing.