hong kong: Chinese regulators on Friday announced a series of rules aimed at curbing expenses and incentivizing rewards Video gameWhich has dealt a blow to the world’s largest gaming market, which has returned to the path of growth this year.
The new rules, which would effectively set spending limits for online games, sparked panic among investors, wiping out about $80 billion in the market value of China’s two biggest gaming companies as investors pulled earnings. But tried to assess the possible impact of more restrictions in the future. ,
Online games will now be banned from awarding rewards to players who log in every day, spend on the game for the first time, or spend on the game multiple times in a row. Online games have all the usual incentive mechanisms.
shares in Tencent Holdings of the world’s largest gaming company fell as much as 16% at one point, while its nearest rival, neteaseThe decline came as much as 25% after the National Press and Publications Administration published new draft rules.
Shares of tech investor Prosus fell 14.2% in early trading on Friday, overtaking Tencent and becoming one of the biggest fallers on a pan-European stock index. It has a 26% stake in Tencent.
“It’s not necessarily regulation – it’s much more of a policy risk,” said Steven Leung, executive director of institutional sales at broker UOB KHian in Hong Kong. “People thought that this kind of risk-taking should have gone away and they started focusing on fundamentals again. That hurts confidence a lot.”
Beijing has become more strict on video games in the past few years. In 2021, China set strict play time limits for players under the age of 18 and suspended approval of new video games for about eight months, citing gaming addiction concerns.
Although the crackdown formally ended last year with the resumption of new game approvals, regulators have continued to enforce restrictions. curb “In-game” expenses. The new rules revealed on Friday are the clearest rules Still its aim is to curb the expenditure in the game. In addition to placing restrictions on reward features, games also need to set limits on how much players can top up. digital wallet For in-game expenses.
Ivan Su, an analyst at Morningstar, said, “Removing these incentives is likely to reduce daily active users and in-app revenue, and ultimately force publishers to fundamentally change their game design and monetization strategies.” Could.”
Tencent and NetEase did not immediately respond to requests for comment.
An industry executive, who declined to be identified due to the sensitivity of the issue, said the new rules are not a new round of action but are in line with official efforts to promote a healthy gaming industry, adding that The market has overreacted.
The games are also banned from offering probability-based lucky draw features to minors and enabling speculation and auctioning of virtual gaming items.
But the new rules include a proposal expected to be widely welcomed by the industry, which would require regulators to process game approvals within 60 days. The new rules also reflect Beijing’s concerns over user data, requiring game publishers to store their servers within China.
The administration is seeking public comment on the rules through January 22, 2024. As a result of Beijing’s crackdown on gaming in 2021, 2022 was the toughest year on record for the Chinese gaming industry as total revenue decreased for the first time. China’s video game market returned to growth this year as domestic revenue rose 13% to 303 billion yuan ($42.6 billion), according to industry association CGIGC.
The new rules, which would effectively set spending limits for online games, sparked panic among investors, wiping out about $80 billion in the market value of China’s two biggest gaming companies as investors pulled earnings. But tried to assess the possible impact of more restrictions in the future. ,
Online games will now be banned from awarding rewards to players who log in every day, spend on the game for the first time, or spend on the game multiple times in a row. Online games have all the usual incentive mechanisms.
shares in Tencent Holdings of the world’s largest gaming company fell as much as 16% at one point, while its nearest rival, neteaseThe decline came as much as 25% after the National Press and Publications Administration published new draft rules.
Shares of tech investor Prosus fell 14.2% in early trading on Friday, overtaking Tencent and becoming one of the biggest fallers on a pan-European stock index. It has a 26% stake in Tencent.
“It’s not necessarily regulation – it’s much more of a policy risk,” said Steven Leung, executive director of institutional sales at broker UOB KHian in Hong Kong. “People thought that this kind of risk-taking should have gone away and they started focusing on fundamentals again. That hurts confidence a lot.”
Beijing has become more strict on video games in the past few years. In 2021, China set strict play time limits for players under the age of 18 and suspended approval of new video games for about eight months, citing gaming addiction concerns.
Although the crackdown formally ended last year with the resumption of new game approvals, regulators have continued to enforce restrictions. curb “In-game” expenses. The new rules revealed on Friday are the clearest rules Still its aim is to curb the expenditure in the game. In addition to placing restrictions on reward features, games also need to set limits on how much players can top up. digital wallet For in-game expenses.
Ivan Su, an analyst at Morningstar, said, “Removing these incentives is likely to reduce daily active users and in-app revenue, and ultimately force publishers to fundamentally change their game design and monetization strategies.” Could.”
Tencent and NetEase did not immediately respond to requests for comment.
An industry executive, who declined to be identified due to the sensitivity of the issue, said the new rules are not a new round of action but are in line with official efforts to promote a healthy gaming industry, adding that The market has overreacted.
The games are also banned from offering probability-based lucky draw features to minors and enabling speculation and auctioning of virtual gaming items.
But the new rules include a proposal expected to be widely welcomed by the industry, which would require regulators to process game approvals within 60 days. The new rules also reflect Beijing’s concerns over user data, requiring game publishers to store their servers within China.
The administration is seeking public comment on the rules through January 22, 2024. As a result of Beijing’s crackdown on gaming in 2021, 2022 was the toughest year on record for the Chinese gaming industry as total revenue decreased for the first time. China’s video game market returned to growth this year as domestic revenue rose 13% to 303 billion yuan ($42.6 billion), according to industry association CGIGC.
(TagstoTranslate)Video Games(T)Tencent(T)Regulation(T)NetEase(T)Hong Kong(T)Gaming Spending(T)Digital Wallet(T)Curb