China plans to limit the amount of money a player can spend in the game. Tencent's capitalization immediately fell by $43 billion
The State Administration for Press and Press Affairs of China has published a preliminary list of restrictions that the Chinese government plans to impose on the local gaming industry.
The key objective of the new document is to limit the use of practices by companies that encourage them to spend more time and money on games. The new rules may have a serious impact on the local industry.
The new document suggests:
- set a limit on the amount of money a player can spend in the game;
- prohibit giving rewards to players for entering the game daily, as well as for making purchases (for example, for the first purchase or for making several purchases);
- prohibit developers from using mechanics that work with the random issuance of items, if the game is available to minors;
- prohibit the use of digital item auctions in games;
- oblige game publishers to keep servers inside China.
But there are also good suggestions. The administration has proposed to speed up the licensing of games. If the document comes into force in its current form, then no more than 60 days will be spent on reviewing each game.
The proposals made immediately reflected on the share price of the country's leading gaming companies. Tencent shares fell by 16% against the background of the publication of the document (the largest drop in the company's history since 2008), and NetEase shares fell by 28% (a record drop during operation).
Dynamics of the share price of Tencent, NetEase and the Bilibili communication platform (its target gamers). All together, they lost about $80 billion in value.
In 2023, total sales revenue in China's domestic gaming market amounted to a record figure of ¥302 billion ($42.4 billion, it had never reached this level before), an increase of 13.95% compared to the same period last year.
