China to increase curbs on video gaming industry

24.12.2023

China has announced new regulations that will impose limits on both the amount of money and time individuals can dedicate to video games. These measures aim to curb in-game purchases and prevent excessive gaming behavior. This proposed legislation deals a blow to the world’s largest online gaming market, still in the process of recovering from a previous regulatory crackdown. Following this announcement, shares in major tech companies experienced a significant decline, resulting in the loss of tens of billions of dollars in market value.

In addition to restricting gaming expenditures and playtime, the draft legislation reiterates a ban on “forbidden online game content that endangers national unity” and poses threats to national security or harms the country’s reputation and interests. This move builds upon Beijing’s initial intervention in 2021, where it stipulated that individuals under the age of 18 could only engage in online gaming for one hour on Fridays, weekends, and holidays.

The upcoming restrictions extend beyond previous measures. Online games are now prohibited from offering rewards that encourage excessive play and spending, including incentives for daily logins and additional fund top-ups, as outlined by the National Press and Publication Administration (NPPA), the industry regulator.

Ivan Su, an analyst at Morningstar, noted that the removal of these incentives is likely to lead to a reduction in daily active users and in-app revenue. This, in turn, could compel game publishers to undertake fundamental overhauls of their game design and monetization strategies. The regulations also introduce pop-up notifications warning users about “irrational” playing behavior, adding another layer to the efforts aimed at curbing excessive gaming habits.