China unveils new gaming curbs, sends tech stocks tumbling

CHINA on Friday (Dec 22) announced new plans to restrict the online gaming industry, sending shares in tech giants, including Tencent, tumbling.

New draft restrictions published online by the regulator are aimed at limiting in-game purchases and compulsive playing behaviour.

Following the news, Tencent dropped over 10 per cent in Hong Kong, while rival Netease was down more than 20 per cent.

Beijing first moved against the gaming sector in 2021 as part of a sprawling crackdown on big tech, including a strict cap on the amount of time children could spend playing online.

An end to a freeze in gaming licences had raised hopes that the focus on the industry had subsided.

But the draft regulations announced on Friday would introduce limits on recharging in-game wallets and abolish features meant to increase gameplay time, such as rewards for daily log-ins.

Pop-ups warning users of “irrational” playing behaviour would also have to be introduced.

The draft regulations also reiterate a ban on “forbidden online game content... that endangers national unity” and “endangers national security or harms national reputation and interests”.

Tencent is the global leader in the sector in terms of revenue, dominating the Asian market and investing in game studios across the world.

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While its stock plummeted on Friday, some independent game studios said the regulations could prove an opportunity.

Cheng Gong, CEO of Chengdu-based Hanjia Songshu, said studios that focus more on innovation and high-quality user experience might benefit.

“The industry felt a bit like bad money driving out good money in the past,” he said.

“Everyone is focusing on getting players to top up more. Only the ones with the most revenues can afford to spend more money on advertising and hence they would get more players topping up in return,” he added.

“It’s a vicious circle.” AFP