China's National Press and Publication Administration is cracking down on common mobile game features, targeting rewards that lure players back. These restrictions aim to curb daily login perks, initial purchase bonuses, and frequent in-game currency recharging, addressing practices notably seen in "gacha" games.

These regulations confront the luck-based, roulette-style mechanisms enticing players to buy items, often pivotal for game progress.

Mobile Games Spending Regulation Passed by China

These rules are poised to directly impact major mobile games globally.

Netease, behind games like "Diablo Immortal," and Tencent, known for "Tower of Fantasy" and the upcoming MMO "Tarisland," faced stock drops-Netease's stock plummeted by 25%, while Tencent's dipped by 16% initially (now around 10%).

The ripple effect of the regulations highlights China's grip on gaming.

As the crackdown progresses, the future landscape of mobile gaming and the revenue streams for top gaming companies in China and globally remain uncertain. The stringent controls aim to reshape gaming norms, fostering a significant industry shift and a more controlled player-spending environment.

According to other reports, China's regulatory focus has broadened, targeting tech giants and now extending control over mobile game rewards, part of a broader crackdown on tech industries.

Initially addressing minors' gaming time, these restrictions expand to curb addictive elements in gaming. With China's colossal gaming presence-650 million users and $45 billion industry revenue-Goldman Sachs data reflects the impact.

Tencent and Netease suffered significant stock drops due to these proposed rules.

Criticism on Weibo underlines economic concerns amid China's struggles, questioning the proposal's timing. The National Press and Publication Administration seeks feedback until January 22, suggesting possible rule adjustments before implementation.

As China intensifies gaming regulations, uncertainty looms over the global gaming landscape, particularly affecting major companies reliant on China's market. These rules signify a pivotal shift in China's tech industry and its worldwide implications.

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China's Evolving Gaming Regulations: Impact and Outlook

China's tightened gaming regulations now include bans on probability-based lucky draw features and curbing speculation on virtual gaming items for minors.

However, a proposal within the rules may offer a silver lining-requiring regulators to process game approvals within a 60-day timeframe, potentially streamlining the process.

Simultaneously, China issued licenses for 40 new imported games, signaling openness to expanding gaming despite the draft rules on game spending. The rules emphasize data security, mandating game publishers store servers in China.

Public comments on these regulations are open until January 22, 2024. The aftermath of Beijing's 2021 crackdown saw 2022 as the Chinese gaming industry's most challenging year, marked by the first revenue decline. But 2023 witnessed growth, with domestic revenue soaring by 13% to 303 billion yuan ($42.6 billion), reported the CGIGC industry association.

The draft rules cast a shadow over gaming stocks worldwide. U.S. stocks like Roblox, Electronic Arts, and Unity Software faced drops between 1.7% and 3.1%, while Ubisoft saw a decline of more than 3% in Europe.

The evolving Chinese regulations impact local markets and send ripples across the global gaming industry.

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