China has unveiled a new bill aimed at curbing in-game spending, adding to a number of measures released in a years-long effort to regulate the booming video game industry, and reduce spending limits of Chinese gamers.
Released on Friday, 22nd December these regulations are the most explicit to date, targeting features that increase spending and imposing restrictions on digital wallet top-ups for in-game purchases.
Key Restrictions
- Spending Limits: Games must set caps on how much players can top up their digital wallets for in-game purchases.
- Reward Ban: Incentives like daily sign-in rewards and large tips for streamers are prohibited.
- Lucky Draw Ban: Probability-based draws like loot boxes are forbidden for minors.
- Data Storage: Game publishers must store servers within China, addressing user data concerns.
Impact on Industry:
Analysts have predicted that the regulations could reduce daily active users and in-app revenue for game developers. Also, game companies may need to rework their game design and monetisation strategies. International impacts could see US and European gaming stocks dipping over the crackdown concerns.
However, while the spending restrictions present challenges to the gaming industry, the draft rules also include proposals that could benefit the industry. Regulators will now aim to process game approvals within 60 days, which is faster than previous processing times.
The administration is also seeking public comments on the draft rules until January 22, 2024, suggesting potential adjustments before implementation. China’s video game market, after a difficult 2022, saw a 13% revenue growth in 2023. The new rules mark a significant tightening of control, forcing the industry to adapt and navigate uncertainties in the years ahead.
