China is implementing new regulatory measures aimed at curbing consumer spending within video games, a move that has significant implications for the gaming industry.
As reported by Reuters, the National Press and Publication Administration released a new set of draft rules aimed at the monetization and engagement tactics used by companies in online games, with the intention of regulation how much money a player can spend in-game. These rules also include restrictions on reward systems such as daily log-in bonuses and consecutive spending incentives.
The proposed regulations have led to a dramatic decline in the market value of Tencent and NetEase, two of the largest video game publishers in the world. Shares of Tencent, the world's largest video game publisher, and its rival NetEase plummeted, wiping billions off their market values. This regulatory move is part of China's ongoing efforts to combat gaming addiction and to regulate the online gaming environment more stringently. In recent years, the government has implemented various restrictions, including limiting gaming time for minors and imposing a freeze on new game licenses.
The new rules will prohibit common features in certain games. For instance, games can no longer allow to offer rewards for first-time spenders or for spending money several times consecutively. Additionally, this bans selling of loot boxes to minors and the auctioning of in-game items. Games will also be required to limit how much money the users can add to digital wallets and must run all their servers for Chinese games within China's borders. Publishers will need to process game approvals within 60 days, which could provide some relief to the industry that has seen a slowdown in game approvals in recent years.
