China has announced it will prevent online games from giving players rewards if they spend in the game for the first time, log in every day or spend prolonged periods playing.
The crackdown is part of China’s tough regulation of the country’s video game industry, which has just begun to see a return to growth.
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The mechanics that it aims to curb are common in online games as incentives for players to carry on playing.
One of the world’s biggest gaming companies, Tencent, which specialises in online mobile gaming, saw shares drop by as much as 16% after the announcement. Shares in its rival, NetEase, also dropped by as much as 25% after the new rules were announced.
Online games will now be banned from giving players rewards if they log in every day, if they spend on the game for the first time or if they spend several times on the game consecutively. All are common incentive mechanisms in online games.
The curbs follow a tough time for the video game industry in China. The country set strict rules in 2021 on the amount of time users under 18 can spend gaming. The same year, China also suspended all new games from being developed for around eight months.
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By GlobalDataThe moves are part of the country’s goal to crack down on what it calls video game addiction.
China’s video games market reportedly returned to growth in 2023 as domestic revenue reached $42bn (298.68bn yuan) for the first time.
The healthy financial report signalled that the industry is recovering from an eight-month crackdown by the country two years ago.
According to video gaming industry association CGIGC, the number of Chinese gamers grew to a record 668 million in 2023, alongside achieving record domestic revenue.
The curbs follow the value of gaming deals in China peaking in 2018, according to GlobalData’s deal database.
The value of deals in the country totalled $15.7bn in 2018. This dropped significantly to just $2.3bn in 2019.
The value of gaming deals in 2023 totalled just $103m, a slight decrease from $472m in 2022.
The gaming software market was worth $197bn in 2021 and will become a $470bn industry by 2030, according to GlobalData estimates.
Mobile gaming will be the dominant segment, accounting for more than 50% of global gaming software revenues by 2030.
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