China appears to have backed away from strict rules aimed at cracking down on games the regulator has deemed “obsessive” gaming. The National Press and Publications Authority (NPPA) proposed regulations that limited the amount of money and time spent on video games. However, on Tuesday, the draft rules could no longer be found on the NPPA website.

China is the world’s largest online gambling market, but the industry has had several run-ins with authorities. The new rules would have limited in-game purchases. Incentives such as daily login rewards for players would also have come under fire, while a pop-up warning of “irrational” behavior was proposed.

Share prices of Chinese game companies, including the world’s largest game company Tencent Holdings and rival NetEase, surged following the apparent turnaround. Shares plunged after the rules were introduced in December, eating nearly $80bn (£63bn) off the value of the two companies. However, analysts say the sector is still overshadowed by uncertainty about what the government will do next.

“I think this kind of sentiment is likely to persist for quite some time unless there is a drastic turn in government rhetoric or unless there is some super supportive policy,” said Ivan Su, senior analyst at Morningstar .

“We don’t know if this will happen in a week, a few months or a few years,” the expert added.

NPPA’s website, which used to show the proposals, now shows a 404 error message.
China’s biggest crackdown on gamers came in 2021, when children were banned from playing for more than an hour on certain days. In the same year, the government stopped issuing gaming licenses for eight months.

As a result, Mr. Su says, “many Chinese developers have started to push their development pipelines toward overseas games.”

NetEase and Tencent have acquired or invested in companies such as France, Japan and the United States.

We’ll see if the current uncertainty sparks another wave of overseas expansion.

Source: BBC