On Friday, Chinese regulatory authorities released a new wide range of rules aimed at containing costs and reducing various incentives and bonuses that encourage players to spend excessive time playing video games. This move has dealt a serious blow to the world’s largest video game market, which had experienced a recovery in growth this year after a decline in 2021.
The new regulations introduce strict limits on expenses in online games. This includes a ban on rewarding players for daily logins, initial deposits into game accounts, or consecutive deposits. These methods of incentivizing users have been widely utilized by video game developers.
Following the announcement of the new restrictions, Tencent Holdings, the world’s largest gaming company, saw a 16% decrease in share price, while its main competitor Netease experienced a 25% drop.
In recent years, Chinese authorities have steadily increased regulatory pressure on the video game segment. In 2021, stringent restrictions were implemented to limit gaming time for individuals under the age of 18. Additionally, the statement and release of new games in China were completely suspended for almost eight months, citing the risks of gaming addiction among adolescents.
Despite the formal lifting of the ban in 2022, Chinese regulators continue to intensify control and introduce new rules to restrict in-game purchases and user expenses.
The newly implemented rules are currently the most stringent measures by regulators to curb expenses in online games. Alongside the prohibition on various bonus programs, game developers are also required to set limits on the amount of money that can be added to electronic wallets used for in-game purchases.
Furthermore, minors are now prohibited from participating in lotteries, and the sale of virtual gaming items for real money or engaging in speculation is strictly forbidden.
User data privacy is also a concern for Chinese authorities. The new requirements mandate that all publishers of online games store player data on servers located within China.
However, among the new restrictive rules, there is one provision that the Chinese game industry has long been striving for. Regulators are now required to review and issue permits for the release of new games within a maximum period of 60 days.
Due to the regulatory restrictions in 2021, the Chinese gaming industry faced its most challenging year in history, experiencing a decline in overall revenue for the first time. This year, the Chinese market