China’s National Press and Public Administration (NPPA) announced a set of draft regulations just before Christmas that sent shockwaves through the video game industry. These regulations were aimed at controlling the amount of time and money that players spend on online games, causing a significant decrease in the stock value of major industry players such as Tencent and NetEase.
The draft regulations included restrictions such as prohibiting developers from providing daily login rewards to players, catching the industry off guard as Beijing had previously shown signs of loosening its control on the sector after a crackdown in mid-2021. This move alone resulted in an estimated $80 billion loss in the industry’s value in a single day.
To alleviate the concerns of investors and the private sector, the NPPA promptly approved over a hundred new online games, including some from Tencent and NetEase. This suggests that Beijing may be reconsidering the strict restrictions imposed by the draft regulations.
In response to the industry uproar, China reportedly removed Feng Shixin, a key official overseeing the press and publications regulator, from his position shortly after the draft regulations were announced. This development indicates that Beijing may be reevaluating its approach to the video game sector.
The news of Feng’s removal comes at a time when China is experiencing a challenging economic recovery, as President Xi Jinping acknowledged the difficulties faced by some businesses in his New Year’s message. It remains to be seen whether these recent reports and developments will be enough to alleviate the concerns brewing in the Chinese video game industry.
Despite efforts to restore confidence in the sector, shares of Tencent and NetEase have only seen a modest increase in trading, still trading below their levels before the draft regulations were announced.
The industry will be closely monitoring for further developments as it navigates the changing regulatory landscape in China. The outcome of these changes could set a new course for the future of the video game market in the country.
