Gaming in China is so back, baby

Has gaming in China dodged a digital bullet?
25 January 2024

• Gaming in China to escape industry-killing restrictions?
• Rules on gaming in China have been removed from  the website where their terms were listed.
• But were they actually draconian – or a prescription for mental health among the gaming community?

In recent years, China gaming crackdowns have been fodder for us-and-them discourse, the idea of a regulating body deciding how long young people could game being almost as heinous (more, to some) than the one-child policy that ended in 2016.

Back in 2021, China’s video game regulator said online gamers under the age of 18 would only be allowed to play for one hour on Fridays, weekends, and holidays. Let’s face it, sometimes threatening a kid with legal action feels like the only way they’ll listen to you – especially when you tell them to turn off their devices.

In China, gaming was branded “spiritual opium” by media outlets, as rising concerns about the impact of excessive gaming on young people meant the government stepped in. As recently as December of last year, draft legislation was publicized that would limit the amount people could spend on video games.

Sure, gaming crackdowns hurt the young people they restrict, but have we considered the monetary loss to gamemakers? Please, God, won’t somebody think of the gamemakers?!

If online games stopped offering rewards for excessive play time and in-game spending, including those for daily logins, as the industry regulator stipulated, people would play less and – no, surely not! – spend less on gaming.

“The removal of these incentives is likely to reduce daily active users and in-app revenue and could eventually force publishers to fundamentally overhaul their game design and monetization strategies,” said Ivan Su, an analyst at Morningstar.

The biggest global gaming market is China, so any changes are high stakes.

But after a U-turn from China, gaming companies can breathe again. The National Press and Publication Administration (NPPA) has removed the December drafts from its site. The apparent change in opinion has seen share prices of Chinese gaming firms jump.

Shares in Tencent Holdings, the world’s biggest gaming company, and its closest rival NetEase, rose as much as 6% and 7% in morning trading respectively. In December, nearly $80bn was wiped from their values, so there’s definitely ground to recover.

All the same, there’s still uncertainty about the future of China’s gaming industry. Su said he thinks ambivalence around gaming will “probably last for quite some time, unless we get a very drastic turnaround in government rhetoric, or unless we get some super supportive policies.”

Is the gaming ecosystem in China about to flourish?

The link to the proposed legislation now opens an error page – possibly the first time in history users have been glad to see one.

The removal of the potential rules from the NPPA website was described by analysts as unusual. However, the consultation period on the rules ended on Monday, the day before their disappearance, suggesting a revision is in store.

After the market turmoil the initial proposal caused, the NPPA took a more conciliatory tone, and Feng Shixin was removed from his position as head of the publishing unit of the Communist Party’s Publicity Department, which oversees the NPPA.

The two most contentious articles of the China gaming crackdown were articles 17 and 18. Article 17 seeks to ban videogames from forcing players into combat, which is the key mechanic of the majority of contemporary multiplayer games.

Article 18 would require games to set a spending limit for players and bar features incentivizing in-game spending. Su “expects the government to remove Article 17 (prohibition of mandatory player-versus-player) and 18 (imposing spending limit) from the final rule,” he told Reuters.

It might not be a popular opinion, but maybe limiting the features of gaming that the Chinese restriction have done could be a good thing…

In the same way that Meta has faced lawsuits for knowingly enabling addictive features in its social media, perhaps it’s time to reconsider what “spiritual opium” we allow kids access to.

Okay, we aren’t sure the opium thing will stick, but the idea of reducing the money spent on virtual rewards and combat-focused gameplay doesn’t seem that outrageous if you separate it from the fact that it’s the Chinese government that was insisting on it, and look at lawsuits that are still live in the US.

Watch this gaming space.

Are the new restrictions now defunct?