China announces new gaming crackdown

China unveiled new rules on Friday aimed at reducing spending on online video games. Under the draft regulations, gaming companies must warn players engaging in “irrational consumption behavior.”

The rules were published by China’s National Press and Publication Administration, which regulates the gaming industry. They forbid companies from giving players rewards for logging in every day, spending money on the game for the first time, or making consecutive purchases, Reuters reported.

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Companies will also be forced to show pop-up messages to players engaging in “irrational consumption behavior,” according to the Associated Press.

Beijing is seeking public comment on the regulations until January 22.

China is the world’s largest gaming market, but Beijing has worked to limit the spread of gaming addiction among Chinese youth. In 2021, regulators forbade under-18s from playing online games for more than three hours per week, and demanded that gaming companies introduce name and age verification to enforce these limits.

Chinese state media described games as “spiritual opium” and “electronic drugs” at the time.

However, the strict limits hammered the stock value of Chinese gaming corporations, including Tencent and NetEase. While both firms recovered, Friday’s announcement sent similar shockwaves through the industry, with Tencent’s stock price down 12.5% as of Saturday, and NetEase down 16%. Tencent is the world’s largest video games publisher by revenue.

With the market rattled, Chinese public broadcaster CCTV stated on Saturday that the rules were still open to revision. Authorities have heard the “concerns and opinions raised by all parties,” the network reported, adding that “the National Press and Publication Administration will study them carefully and further revise and improve them.”