China Unveils Regulations Aimed at Curbing Expenditure on Video Games

China Unveils Stricter Rules Targeting Video Game Spending
Chinese regulators have introduced a set of stringent regulations aimed at reducing spending and reward incentives within the video game sector, impacting the world’s largest gaming market, which recently showed signs of growth.
These new rules will impose spending limits on online games and restrict certain reward mechanisms, including daily login rewards, first-time spending rewards, and consecutive spending rewards – practices commonly used in online gaming.
The announcement caused significant concern among investors, resulting in a collective loss of around $80 billion in market value for China’s leading gaming companies, Tencent Holdings and NetEase. Shares in Tencent plummeted by as much as 16%, while NetEase saw a staggering 25% decline.
The draft rules further ban probability-based lucky draws for minors and prevent speculation and auctioning of virtual gaming items. Additionally, they mandate game publishers to store servers within China and seek public comments on these rules until January 22, 2024.
Despite these strict measures, there was a simultaneous announcement granting licenses for 40 new imported games for domestic release, signaling Beijing’s willingness to permit more games in the country.
The market’s reaction to these regulations impacted gaming stocks globally, with U.S. companies like Roblox, Electronic Arts, and Unity Software seeing declines between 1.7% to 3.1%. Similarly, European developers such as Ubisoft witnessed over a 3% drop in their stock value.
These stringent measures mark Beijing’s ongoing efforts to control gaming activities, reflecting concerns over spending habits and user data within the industry.

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