Chinese authorities impose strict restrictions on video games for developers and players

Propaganda Department of the Central Committee of the Communist Party of China published a draft of new rules for the video game market, which are designed to strictly regulate the requirements for both developers and publishers of these products, and for the users themselves. The bill is aimed at combating gaming addiction among children and youth. In 2021, the country’s authorities will already limited time that minors can spend playing games, and also introduced age verification for players.

The new restrictions require that developers and gaming platform operators must obtain permission for each game to ensure that inappropriate content does not appear in it. Applications to review games must be processed within 60 days, the bill says. Platforms were required to cancel rewards for players for the first or daily login to a gaming site and other bonuses that encourage regular and long-term play, introduce restrictions on spending in games and the purchase of game currency, remove incentives for such spending, etc. Platforms will be required to show players a warning banner, if they demonstrate “irrational gaming behavior” by spending money to replenish their game wallet.

In-game spending is practically the main source of income for developers and gaming platforms. The announcement of the new restrictions was made so unexpectedly by the market, and the proposed restrictions were so significant, that shares of video game developers and publishers, not just Chinese ones, fell sharply. Thus, shares of Tencent Holdings fell by 12% by the end of the trading day, and the capitalization of this world’s largest video game developer decreased by $46 billion. Shares of Netease fell by 28%, Nexon – by 8%, Bilibili – by 8%. In Europe, shares of French Ubisoft fell 8% in the morning.

China’s online gaming industry is the largest in the world, with about 650 million users and revenue of $45 billion last year. The market was expected to grow by almost 14% this year.

Alena Miklashevskaya