New draft regulations from China’s State Press and Publication Administration (PPA) could spell trouble for the country’s gashapon gaming industry. These new rules have three goals: prohibiting incentives for daily logging in and/or spending, warning players about “irrational consumer behavior,” and limiting the amount of time and money players can spend in the game.
While the regulations don’t specify which games these are targeted at, they’re clearly aimed at games that either consume a lot of time or allow for over-spends. MMOs—the infamous time vampires—are clearly victims of time constraints, while the country’s gacha scene (made famous by global hits like Genshin Impact and Honkai Impact) suffers from a glut of microtransactions And notorious.
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The announcement’s impact on gaming companies was most evident on the stock market, with shares of Tencent and NetEase both falling sharply as a result. While Chinese players have been most clearly affected, the impact on global users remains unclear.
It’s worth noting, however, that previous regulations have resulted in changes to all versions of popular Chinese games – take a 2018 ruling regarding the disclosure of loot box drop rates as an example. As a result, games like Genshin Impact and Honkai Impact make it clear to those interested how likely it is to obtain certain rewards.
As to why this is the case, we can only speculate. China has repeatedly had issues with the tech sector over the years, limiting gaming time during the workday for teenagers under 18, with this year being a notable example. These recent PPA regulations appear to have a similar goal – prohibiting behavior that the Chinese government deems unhealthy or unacceptable.
As you can imagine, this can be a big deal for gaming companies that rely on high playtime from their users or a select few big players to stay afloat. The revenue generated by various Chinese games is staggering – Genshin Impact brought in $54 million from global players in November. Let’s not beat around the bush here – while a large portion of this revenue comes from recreational consumers, whales play an important role in the ecosystem here.
It could also mean the demise of various features that the wider player base finds positive, such as daily login bonuses. Honkai Impact is a recent example of a game that has gained widespread acclaim from the consumer base by offering free pulls to players who log in regularly. This is a great way to keep players engaged, even during quieter periods, but it also directly affects the more predatory aspects of the game.
For those addicted to these games, limiting spending can be beneficial. Most of the world’s live service game ecosystems are designed to get you to spend big bucks, and gacha games are certainly no exception. There’s a reason why loot boxes are considered gambling by different countries. This new wave of spending caps may be just what some players need.
This is a complex issue. We’ll have to sit back and watch how the Chinese gaming industry reacts to these new rules and how it will impact us in the West. Tell us what you think about this issue below!