China has announced that it will limit the amount of time children can play video games down to three hours on most weeks.
The news was initially reported by Bloomberg which states that the new rules are the strictest limit yet. China is the world’s largest mobile gaming market and this escalation will undoubtedly deal a huge blow to Chinese developers like Tencent and NetEase.
Three Hours Per Week
The new rules for gamers under the age of 18 dictate that they can only play online from 8-9 pm on Fridays, Saturdays, Sundays, and statutory holidays.
China has, recently, been aggressively going after tech companies in the country to exert further control over them. The Chinese Communist Party’s (CCP) reasoning is to tackle the supposed widespread “gaming addiction” afflicting children. In early August, an article was published in a state-run newspaper that called video games “electronic drugs.”
That article singles out Honor of Kings by referring to it as “spiritual opium” which led to Tencent losing $60 billion of its market value. And just as investors were inching their way back, China implements these restrictions.
Disappearing Player Base
According to these companies, players under the age of 18 amount for a small part of profits, but long term, the new rules could eat away at the player base.
The new rules also state that gaming companies must implement a real-name registration and login system to their games and restrict access to the unregistered. The details are still unclear whether this registration standard will only affect minors or expand to include adults as well.
For reference, there are around 110 million minors in China that play video games today.
According to Tencent, players under 16 account for approximately 2.6% of its total player spend, which shows the overall impact won't be too significant, but it's still a notable chunk.
— Daniel Ahmad (@ZhugeEX) August 30, 2021
Outside of China, reactions to the rules are negative, as seen with the director of investment company UOB KayHian. He said he thought “regulatory measures would take a break…” but it just isn’t stopping. This will hurt the rebounding tech companies for sure.
All’s Seemingly Fine
Companies inside China seem to be pretty okay with these changes, or at least they claim to be. In recent reports, Tencent and Bilibili, a video-sharing website, said that they “faithfully implemented… anti-addiction measures…” with the former going on to say it will abide by “the latest requirements from Chinese authorities.”
#BREAKING#China strictly restricts the time minors spend on online games. All online games can only be accessible to minors for 1 hour from 20:00 to 21:00 on Friday, weekends and holidays.
Shares of #NetEase drop 3.4% in the US premarket session.#Tencent $NTES #gaming pic.twitter.com/0Ghr2VB2Gn
— CN Wire (@Sino_Market) August 30, 2021
These restrictions will only affect online games, with single-player games seemingly in the clear, but who’s to say the CCP can’t implement a similar law to those types of games? The reasoning that is often seen with this story is the CCP is trying to combat gaming/gambling addiction.
Mobile gaming is extremely popular in Asian countries with some of the most popular being Gatcha games.
Gatcha games do have a microtransaction aspect to them as these require gamers to spend money to get the characters that they want. So it makes some sense why a government would want to restrict children having access to these types of games.
Perhaps microtransactions should be banned instead if that’s the issue, but companies and the government risk losing a lot of money by doing so.
It’s unknown whether the Chinese government is going to extend these restrictions to adults or implement more rules on children, but considering how aggressive the state has been towards tech companies, nothing is out of the realm of possibility.