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Here are the steps the Chinese government has taken in recent months to rein in the industry:
In recent months, the Chinese government has taken aim at the online gaming industry. Through restricting playing time for minors, imposing curfews, and encouraging content reviews, regulators are solidifying the transition from viewing the industry as an area with strong growth potential to a serious threat to China’s social dynamics. Gaming is increasingly viewed as threatening social cohesion and safety, leaving China’s internet giants and burgeoning gaming industry in a vulnerable position.
In aggregate, these measures present a new vision for gaming in China defined not by profitability or entertainment, but as an extension of products that shape cultural values and childhood development. Gaming among minors is viewed as counter to maintaining strong family ties, developing strong morals, and achieving academic success.
The reverberations of this shift in attitude have already impacted popular foreign gaming companies. On November 15, Epic Games, the developer of Fortnite, completely closed its game servers in China.
Gaming in China was already highly regulated before the announcement of new restrictions this year. Earlier regulations focused on content controls and ownership structure, as well as regulating the hours per week that minors could play games online, though not to the same extent as today.
Game developers already had to comply with requirements to receive a Software Copyright Certification, complete an Internet Content Provider (ICP) filing, and undergo a security assessment prior to publishing. Once published, all games already required real name verification and restricted minor access to games viewed as containing inappropriate content. If a game costs money to play or includes in-game purchases, developers must apply for a National Print and Publications Administration game license, which requires a review of the game’s content, artwork, and storyline. To further complicate the picture for foreign businesses, all games must be 100 percent Chinese-owned, which necessitates forming domestic partnerships.
The new round of measures explicitly links content controls and restrictions on gaming time with the protection of minors, a sign that the government may enforce these measures more proactively.
Here are the steps the Chinese government has taken in recent months to rein in the industry:
Prior to the announcement, the industry was booming. In 2020, the gaming industry’s revenue increased by 20.71 percent to roughly $43.2 billion. In 2020, mobile games—a type of gaming embraced by China’s youth—grew by 32.61 percent and accounted for 75.24 percent of total gaming industry revenue.
The majority of Chinese youth play games online, with about 13.2 percent clocking in more than two hours during the school week. Of the estimated 720 million gamers in China, roughly 110 million are minors, a small but not insignificant chunk of China’s total gaming population.
While the new wave of restrictions may seem drastic, the immediate impacts are unclear given the potential workarounds and the fact that no specific enforcement measures have been announced. Early indicators reveal that using Virtual Private Networks (VPNs) or registering with an adult’s contact information are viable means of bypassing current restrictions.
However, the new policies could have a lasting social and cultural impact that will continue affecting industry growth down the road, such as deterring would-be gamers from even considering the hobby well into adulthood or alarming parents into fiercely restricting their children’s access to gaming. It is also possible that China will tighten policies governing the gaming space even more in the coming years.
Hannah Feldshuh is a business advisory services manager at the US-China Business Council. Her work focuses on the ICT industry and she is based in Beijing.