China mulls imposing harsh restrictions on gaming industry

Gaming experts warn of massive damage to smaller gaming companies
An image displaying two people playing a video game — Unsplash
An image displaying two people playing a video game — Unsplash

China has decided to impose further restrictions on its local video game industry, introducing rules potentially discouraging players from spending copious amounts of time and money on online video games.

The new draft — which was released by the Chinese video game industry regulator, National Press and Publication Administration (NPPA), on December 22 (Friday) — stated that online games should not incentivise players by offering daily login rewards, funds top-up rewards, and should limit top-up amounts and provide pop-up reminders for irrational playing patterns.

According to BBC, the Chinese video game industry regulator has not imposed these restrictions yet and is seeking opinions on this draft from public stakeholders. The process of securing votes is expected to continue till January 22.

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The publication reported that the planned curbs further reiterate a ban on "forbidden online game content that endangers national unity" and "endangers national security or harms national reputation and interests".

China aim to control side effects of video games

Previously, China has already introduced a rule in 2021 that bars gamers under 18 from playing video games for more than an hour, and that too only on weekends and holidays.

China enforces such rules under the rhetoric of protecting national interests and security, which the recent draft also mentioned, highlighting that such games endanger national security, and secrets, or endanger its honor or interests.


Although the draft only seeks public opinion currently, China’s harsh history of enforcing laws has made this draft send out shockwaves in the business community, with shares of various gaming companies down by a significant margin.

This includes Tencent, the biggest stakeholder in the Chinese gaming industry, whose shares fell by 12.4%. Furthermore, shares of NetEase and Dutch investor, Prosus, fell by 24% and 14%, respectively.

However, Gaming consultant Daniel Camilo told the BBC that these proposed restrictions could affect those types of "monetisation models" which would then have to be restructured and "some of the games might have to be pulled out from the stores."

The consultant believes that both gaming giants Tencent and NetEase would recover the losses incurred in the long run; however, smaller gaming companies will suffer.

"If a small company is affected in a few million, then it might mean that they have to close their doors," he said.

"2023 has been a year full of layoffs and a lot of struggle in particular for the gaming industry in China. So this is kind of a severe blow I would say, especially for the medium and smaller publishers."