China’s regulators restrict game monetization, sending Chinese game stocks down
China has been tough on games in recent years and its regulators have now cracked down on monetization practices. …
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China has been tough on games in recent years and its regulators have now cracked down on monetization, sending the market value of both Tencent and NetEase downward.
Reuters said the new rules limit spending by players on online games and institute a ban on daily login rewards, first-time purchase bonuses and any incentives game developers create for repeat spenders. This comes amid a slowdown in the game industry and layoffs by many companies.
Tencent’s stock fell from $40.45 a share on Thursday to $36.47 a share on Friday. It’s still worth $345.69 billion, but down 10% from a day earlier.
NetEase’s stock fell from $104.43 a share to $87.64 a share. The company is worth $56.52 billion, down 16% from a day earlier.
China also said that game makers cannot offer probability-based luck draw features to minors — possibly putting limits on something termed in the industry as “gacha.” Loot boxes have long been controversial in gaming, and now publishers are banned from enabling auction of and speculation on in-game items.
On top of that, games in China must now store their data on servers in side the borders of China. That could be a non-starter for those concerned about surveillance of people inside of China or even those outside of the country, given the Chinese government’s extensive surveillance system.
The changes are in a public review period until January 22.
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