China Introduces New Rules for Online Video Games
Chinese regulators have recently announced new draft rules for online video games, with a focus on players’ spending as part of a broader crackdown on the sector. These rules include requirements for game coin trading services to use real-name central bank digital currency (CBDC) wallets. The regulations also prohibit services that allow players to exchange game coins for fiat currency.
Spending Limits and Bans on Daily Login Rewards
The draft also stipulates that online games must impose spending limits and eliminate daily login rewards. In addition, significant tips for rewards to livestreaming players and probability-based luck draw features for minors are banned.
Game Approvals and Storage Requirements
The draft outlines that game approvals must be processed by regulators within 60 days, while game publishers are required to store their servers within China. The National Press and Publication Administration (NPPA) is seeking public opinion on the proposed regulations until January 22, 2024.
Stocks of Chinese Tech Giants Plummet
The release of the draft rules caused shares of several Chinese internet giants to plummet, resulting in a significant loss of market value. Tencent, one of the largest multimedia companies, saw its shares fall by 12.35% in Hong Kong trading, wiping off $47 billion from its market cap. Other companies such as NetEase, Bilibili, and Kuaishou also experienced substantial declines in their share prices.
Hot Take: Chinese Regulators Tighten Control over Online Gaming Industry
Chinese regulators have introduced new draft rules aimed at curbing excessive spending and promoting responsible gaming in the online video game industry. By requiring game coin trading services to use real-name CBDC wallets and banning the exchange of game coins for fiat currency, regulators aim to enhance transparency and prevent unauthorized transactions. Additionally, the restrictions on spending limits, daily login rewards, and certain features for livestreaming players and minors are intended to address concerns about addictive behavior and protect vulnerable users. However, the sharp decline in stock prices of Chinese tech giants highlights the potential economic impact of these regulations on the gaming industry. As the proposed rules undergo public review, stakeholders will closely monitor their potential effects on the market and player behavior.
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