Chinese officials on Friday, unveiled several regulations with the goal of reducing incentives and expenditures related to video games.
The two largest gaming businesses in China lost about $80 billion in market value due to investor fear over the new regulations, which essentially established spending limitations for online games. Investors were trying to determine how the restrictions would affect profitability and whether more restrictions might be imposed.
As of right now, it is against the rules for online games to award players for daily logins, first-time purchases, or multiple sessions played in a row. These are all typical online gaming incentive systems.
“It’s not necessarily the regulation itself – it’s the policy risk that’s too high,” Steven Leung, executive director of institutional sales at broker UOB Kay Hian in Hong Kong said.
“People had thought this kind of risk should have been over and had started to look at fundamentals again. It hurts confidence a lot.”
Vice president of Tencent Games Vigo Zhang responded that the company has been closely adhering to regulatory standards and that Tencent will not need to radically alter “its reasonable business model or operations” for games in response to a question on the draft guidelines’ potential effects.
Zhang continued by saying that since Beijing began to prioritize minor protection in 2021, minors have been spending historically low amounts of money and time on Tencent’s games.
Over time, Beijing has grown more restrictive when it comes to video gaming. Citing worries over gaming addiction, China banned new video game approvals for around eight months in 2021 and imposed severe gameplay limits on anyone under the age of eighteen.
Despite the official conclusion of the crackdown last year, when new game approvals resumed, officials have kept imposing limits.
