How New Government Policies in China Disrupted the World’s Biggest Games Market

The games industry in China has been significantly disrupted by a new policy that was implemented in March, resulting in a sudden halt in the licensing of new games. More recently, government officials have indicated that, in general, fewer new games will be licensed in the future, and children’s daily playtime may be restricted. Officially, this policy is based on health and safety concerns — in particular, reducing the risk of myopia (nearsightedness) for children.

As well as addressing genuine health concerns, the government is possibly asserting its control over the thriving Chinese games market, which has become a major part of the overall media and entertainment industry. In this article, we will share our views on this disruptive development and discuss how it will affect the biggest games market in the world, which generated revenues of $32.4 billion in 2017 and, before the policy change, we expected to reach $37.9 billion in 2018.

What Exactly Happened?

At the end of August 2018, the Government of China elaborated further, confirming that authorities will regulate and more closely monitor existing games, and will explore an age-appropriate reminder system to limit children’s playtime. It specifically mentions a maximum daily session time of 15 minutes with a maximum daily playtime of one hour. South Korea implemented a similar policy back in 2011, stopping children under the age of 16 from playing online video games between midnight and 6:00 am. The restrictions will particularly affect publishers of immersive competitive titles like Tencent’s Honor of Kings, one of the country’s most popular mobile games. Across the board, fewer new games will be licensed in the future according to government officials.

What’s more, Tencent recently announced it will be stricter with age-verification checks for China’s new Honor of Kings players, requiring them to register under their real names. The system will link new players’ profiles to the Chinese Government’s public security database, meaning the game can precisely identify underage players and apply the government’s new restrictions. This is the first time a firm has used such a system to reduce minors’ playtime. Although the verification check is launching first in Honor of Kings, Tencent has confirmed it will be progressively rolled out for the company’s full range of titles.

What Is the Impact on Consumers and Companies?

The financial consequences of the disruptive policy are already becoming visible, with most Chinese public game companies reporting significantly less-than-expected H1 growth compared to last year. This has also impacted share prices, as highlighted by Tencent’s recent stock price drop. Only a few publishers with a mainly overseas focus, such as Ourpalm and Efun, reported higher growth in H1 this year (compared to last year).

What Is the Impact on the Games Industry in China?

Will the Situation Affect Newzoo’s Forecasts?

Newzoo will continue monitoring the situation, and we will report our conclusions in the upcoming October update of our Global Games Market Report. For now, we are keeping a close eye on the market — as we always do.

You can find the original article here.

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Newzoo is the leader in video games and gamer data. We provide a panoramic view of how and why people engage with games. Drop by www.newzoo.com to learn more!