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China Proposes Tighter Videogame Controls, Impacting Major Developers

2023.12.26

 

Key Takeaways

  • China’s videogame regulator proposes measures to limit daily gaming incentives and in-game expenditures.
  • Regulatory proposals cause significant stock drops for major gaming companies Tencent and NetEase.

Intensifying Gaming Regulations in China

In a significant move, China’s videogame regulator has proposed stringent measures to curtail the time and money people spend on videogames. The measures include eliminating daily log-in rewards and capping in-game spending, aiming to address concerns around gaming addiction and the impact on players’ mental health. This regulatory move has severely impacted major Chinese game developers, with Tencent Holdings witnessing a 12% drop in shares and NetEase experiencing a substantial 25% fall.

Global Perspectives on Videogame Regulation

While China’s strict internet and media control contrast sharply with democratic nations, concerns about videogame addiction and its potential effects are shared globally. In the past, China had banned gaming consoles and imposed strict playtime limits for minors. The latest proposals, under review until January 22, 2023, reflect China’s ongoing efforts to manage the gaming industry’s influence on youth.

China’s Gaming History and New Restrictions

China’s history with gaming regulations dates back to 2000, with a long-standing ban on gaming consoles and limits on online gaming. The 2021 restriction limiting minors to three hours of gaming per week has had mixed effectiveness due to identification challenges and workarounds. The current proposals, aimed at reducing daily gaming incentives and in-game spending, could reshape how games are designed and monetized.

Impact on the Gaming Industry

The proposed regulations could lead to a decrease in user engagement and revenue for gaming companies. Morningstar analysts anticipate that these changes may compel game publishers to fundamentally alter their game design and revenue models. As the world’s second-largest gaming market, the impact of these regulations on China’s gaming industry could be profound.

 


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