We all know about the crackdowns by the Chinese government.
These crackdowns occur from time to time to keep the private sector in check and prevent them from getting too powerful.
Unfortunately, the gaming industry is the latest to get caught in the web of regulations in China.
The announcements about the slew of measures to be implemented against games in China have caused the stock prices of some of the largest gaming companies in China to be badly hit.
Here is more about the new gaming regulations in China.
China Announced New Gaming Regulations
Just last Friday (22 December 2023), the Chinese authorities dropped a “bomb” on the gaming industry by revealing a slew of regulations slated to come into effect soon.
The restrictions include limitations on how much money and time people can spend playing video games.
The move strengthens the Chinese position that there is a ban on the “forbidden game content that endangers national unity” and also “endangers national security” or “harms national reputation and interests”.
If you think that this harsh stance on gaming mirrors what your parents said to you when you were growing up, we’re with you in this one.
For online games that offer in-game rewards for continuously playing, they must cease offering such “carrots” for the players.
The industry regulator, the National Press and Publication Administration, said that the removal of such incentives is likely to “reduce daily active users and in-app revenue,” which could cause a rehauling of the game publishers’ monetisation strategies.
The Stock Prices of Tencent and NetEase Were Hit as a Result
If you’re shocked that the Chinese government would take such drastic measures to curb online gaming, so are we.
After all, gaming is a favourite pastime amongst people.
And some of the biggest names in gaming are from China.
Tencent and NetEase are some names which you should be familiar with if you’re a gamer.
Also, who hasn’t played Genshin Impact when it was released amidst the pandemic in 2020?
Unfortunately, Tencent and NetEase are already feeling the effects of the announcement of the restrictions.
Their share prices took a plunge after the restrictions were announced. Tencent’s share price dropped 12%, while NetEase’s share price plunged as much as 25% after the announcement.
Ouch.
If anything, this just spells the start of a gloomy time for these gaming giants as the online gaming arena looks set to change in China.
Let’s just hope that Singapore doesn’t follow suit soon.
Here’s a simplified summary of the South Korea martial law that even a 5-year-old would understand:
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