How China’s regulatory landscape for video games is expected to evolve

China’s focus on growing its economy and maintaining positive market sentiment amid headwinds was a probable factor as to why regulators pulled the plug on the latest draft gaming regulations, analysts say, despite its potential merits in curbing addiction and excessive spending.

At the same time, observers expect authorities to stay the course on enacting new rules even as the timeline remains uncertain – albeit with tweaks to the fine print to shore up what were seen as vague dictates.

Put up by China’s gaming watchdog, the National Press and Publication Administration (NPPA), last December, the draft rules essentially aimed to curb spending on video games.

They stated that online games must not offer rewards that entice people to excessive play and spend, as reported by the South China Morning Post. These include rewards for daily logins and topping up of accounts with additional funds.

All video games must also put a cap on how much players can top up their accounts and alert users about “irrational consumption behaviour”, according to the watchdog. Members of the public could provide feedback on the rules until Jan 22.

The surprise move rekindled fears that the industry was once again in Beijing’s crosshairs after a sweeping crackdown in 2021, which saw severe curbs on playtime for children and an eight-month freeze on the approval of new video games.

The result – a market meltdown as spooked investors dumped shares in major Chinese video gaming stocks. Chinese gaming titan Tencent, its closest rival NetEase and Bilibili, a social media platform popular with users, shed a combined US$80 billion in market value within a day.

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