China unveils stringent regulations on video games

China is set to introduce new regulations limiting spending and playtime on video games, marking a significant blow to the world’s largest online gaming market as per a report by BBC.

China is set to introduce new regulations limiting spending and playtime on video games, marking a significant blow to the world’s largest online gaming market as per a report by BBC.

The rules aim to curb in-game purchases and prevent obsessive gaming behavior. In response to the draft legislation, shares in major tech companies, including Tencent, experienced a sharp decline, wiping off tens of billions of dollars in value.

The restrictions extend the previous 2021 ruling, now prohibiting online games from offering incentives that encourage excessive play and spending. Pop-ups warning of “irrational” playing behavior will also be implemented.

The move, spearheaded by the National Press and Publication Administration (NPPA), emphasises a ban on content that threatens national unity and security. Tencent, a dominant player in the gaming sector, saw a 12.4% drop in share price, while rival NetEase, down more than 24%, and Dutch tech investor Prosus, down over 14%, also suffered losses.

(For top technology news of the day, subscribe to our tech newsletter Today’s Cache)

The shockwaves affected Hong Kong’s Hang Seng Index, dropping over 4% at one point. The proposed rules may impact Tencent and NetEase’s “pay to win” monetisation models, potentially requiring restructuring and removal of certain games from stores.

The regulations could pose a severe challenge for smaller gaming companies, contributing to a challenging year for the industry in China, marked by layoffs and struggles. The government’s rules might expedite game approvals, mandating server housing in China and seeking public comments on the proposals until January 22.