China’s Increased Curbs on the Video Gaming Industry

    China, the world’s largest gaming market, is set to introduce new regulations that will limit the amount of money and time people can spend on video games. These restrictions aim to limit in-game purchases and prevent obsessive gaming behavior. Link to the original Source.

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    The draft legislation is a blow to the world’s largest online gaming market, which is still recovering from a previous crackdown. The planned curbs also reiterate a ban on “forbidden online game content that endangers national unity” and “endangers national security or harms national reputation and interests.”

    Beijing first moved against the gaming sector in 2021, ruling that online gamers under the age of 18 would only be allowed to play for an hour on Fridays, weekends, and holidays. But the latest raft of restrictions goes further. Online games should not offer rewards that entice people to excessively play and spend, including those for daily logins and topping up accounts with additional funds.

    The removal of these incentives is likely to reduce daily active users and in-app revenue, and could eventually force publishers to fundamentally overhaul their game design and monetization strategies. Pop-ups warning users of “irrational” playing behavior are also set to come into force.

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    Source: Getty

    Following the announcement by the National Press and Publication Administration (NPPA), Tencent’s share price fell by 12.4%. Tencent Games’ vice president Vigo Zhang said Tencent would strictly implement any new regulatory requirements.

    Shares in rival NetEase were down more than 24%, and shares of Dutch tech investor Prosus lost more than 14%.

    The restrictions could affect those types of “monetization models” which would then have to be restructured and “some of the games might have to be pulled out from the stores”. The new draft rules have not veered from regulators’ ongoing focus on ensuring companies have “reasonable business models and operating cadence.”

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