Why is China limiting gaming? | How will it impact Gaming Startups?

PV Vyshnavi PV Vyshnavi
Sep 3, 2021 5 min read
Why is China limiting gaming? | How will it impact Gaming Startups?

On August 31st 2021, China’s National Press and Publication Administration have released a statement regarding the restrictions on online gaming in order to reduce gaming addiction among minors. The video game companies will now have to restrict gaming time for teenagers below the age of 18 years old.

The minor will not be allowed to play only from 8 pm to 9 pm on Friday and at weekends like Saturday and Sunday. This move was taken by the Chinese Government in order to combat the gaming addiction that is rising among Chinese minors. The statement also urged parents and schools to step up their supervision as children could continue playing through adult’s accounts.

The new restrictions imposed by the Chinese Government
The Gaming addiction in China
What do teenagers think of the new gaming restrictions?
Impact of these restrictions on Gaming Startups
Frequently Asked Questions

The new restrictions imposed by the Chinese Government

Besides adding restrictions on forbidding teenagers under 18 years to only 3 hours of playing every week, the gaming companies must also ensure that the verifications for the apps are strict.

The gaming apps should also be connected to an anti-addiction system that will be set up by the NPPA. This system is a strict ID verifications system that lets a person have only one account and only through their real name. The punishments for going against these restrictions are that the gaming companies will have to pay huge fines and penalties.

This is not the first time the Chinese government has imposed restrictions as in 2019, the government passed laws to limit minors to play games for only one and a half hours on weekdays and three hours on weekends, with no gaming from the timings of 10 pm to 8 am. There was another limit on how much minors can spend on in-app game purchases, the maximum amount that could be spent depending on age was ranged from $28 to $57.

Earlier in 2017, the major gaming company Tencent Holdings also made restrictions for limiting the time minors spent on playing their game Honor of Kings, after many parents complained about their kids getting addicted to the game. Tencent also came out with a facial recognition feature that helped parents keep vigilance over their children especially at night.

The Gaming addiction in China

China is known to be the world largest market for online gaming, the top gaming companies are from China. This has led to China youth becoming highly addicted to the gaming culture. The situation in China has worsened as teenagers below 18 years are getting treated for their gaming disorders in clinics. Besides Gaming addiction, China also reported that its rates of nearsightedness have increased considerably in 2018.

According to many studies over 62.5% of Chinese teenagers play online games often, while 13.2% of teenagers play online games for more than two hours every day.

China also has had growth rates of Myopia for the past two or three years. According to the newspaper called People Daily, the government had to be ruthless with restrictions because it wanted to impair normal study life and improve the physical and mental health of the teenagers.


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What do teenagers think of the new gaming restrictions?

Teenagers over the country are enraged and are not happy with the new restrictions. Many teenagers came to social media to showcase their outrage with the new restrictions.

One comment said, β€œThis group of grandfathers and uncles who make these rules and regulations, have you ever played games? Do you understand that the best age for e-sports players is in their teens?"

Some teens think that it is a useless restriction as many kids can use fake details or and national identification numbers when signing into games by using the login details of adult family members.

A 17-year-old gamer added that this wasn't a family education issue, not a gaming issue. However, many parents are heartened by the new rules saying that this will help reduce their children’s addiction towards gaming.

Revenues generated by online gaming in China
Revenues generated by online gaming in China

Impact of these restrictions on Gaming Startups

All the gaming companies will now have to have a strict ID verification system, which means the users can only have one account and only through their real name. The regulators are installed in order to keep a watch on whether or not gaming companies comply with local regulations.

According to many analysts, the restrictions will not have much financial impact on the Gaming Industry now as the children do not provide much revenue for gaming companies, but the implications for the long-term growth of the gaming industry can be worse. Another analyst also added that these restrictions have the possibility to destroy the entire habit-forming nature of playing games at an early age, which can be detrimental to the gaming industry.

What the industry is scared of is if the Chinese government stops approving new games as it had done in 2018, where it had suspended game approval of new video game titles for a duration of nine months. In addition to that, the new restrictions do not punish the individuals for infractions but the gaming companies.

But other investors are not concerned about the restrictions and have continued buying Chinas major gaming companies. The top Gaming Companies like NetEase, Krafton Inc, Nexon and Koei Tecmo, have already seen their stocks falling from over 3.45 to 4.8%.


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Frequently Asked Questions

What are the top Gaming companies in China?

The top Gaming companies in China are Tencent, NetEase, Nexon and Koei Tecmo, etc.

What are the new gaming restrictions in China?

The video game companies will now have to restrict gaming time for teenagers below the age of 18 years old, so they can now only play for three hours a day.

Will the new restrictions impact the Gaming industry in China?

According to many analyst, this will not impact the gaming industry currently but the implications for the long-term growth of the gaming industry can be worse.

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