Animated game players participate in ChinaJoy 2021, July 30, 2021, in Shanghai, China.
Costfoto | Barcroft Media | Getty Images
Children and teens under the age of 18 in China will only be able to play up to three hours a week of online video games, according to new rules released by the China Press and Publications Administration on Monday.
The decision is a new blow for the country’s gaming giants, from Tencent to NetEase, who have faced a regulatory attack this year in areas from antitrust to data protection. This has scared investors and wiped out billions of dollars worth of Chinese technology stocks.
According to a translated notice on the new rules, children under the age of 18 in China will be able to play video games one hour a day between 8pm and 9pm on Fridays to Sundays and public holidays. The agency billed the rules as a way to safeguard the physical and mental health of children.
The rules will apply to companies that provide online gaming services to minors, limiting their ability to serve these users outside of established hours. Companies will also not be able to provide services to users who have not logged in with a real name record, preventing them from being simply ignorant of their users’ backgrounds.
The latest NPPA rules significantly reduce the time minors can play online games. By 2019 rules, children under the age of 18 were allowed to play games for 1.5 hours a day most days.
“There are more than 110 million children playing video games in China today and we expect the new limits to lead to a decrease in the number of players and a reduction in the amount of time and money spent on children under the age of 18 in gaming.” . Said Daniel Ahmad, senior analyst at Niko Partners.
“However, we do not expect the decline in spending to have a significant material impact on the end result of gaming companies, as time and spending limits have already been set for minors over the past two years. “Therefore, we expect a softer impact on overall growth rates, as spending among children was already low.”
Tencent has said earlier that only a small amount of gaming revenue comes from younger players in China. In the second quarter, 2.6% of gross gaming revenue in China was for players under 16 years of age.
Shares in the U.S. of NetEase, one of China’s giants, fell 6.7% in morning trading.
Tencent said in a statement on its WeChat account that it will implement the new requirements and supports the new rules. The Chinese gaming giant has taken steps to circumvent regulators in recent months. In July, Tencent introduced a requirement for players to do a facial recognition scan on the phone to verify if they are adults.
NetEase was not immediately available for comment when contacted by CNBC.
For a long time, Beijing has been concerned about gambling addiction among the country’s youth. Gaming consoles were banned for about 14 years until 2014. And a state-affiliated publication published an article this month titling online gaming as “opium” and calling for additional restrictions. The article was withdrawn and subsequently republished with a new headline and references to “opium” were removed. But it raised concerns among investors that more gambling restrictions could occur.
This month, Tencent warned that it was expecting new regulation, but was confident it could comply.
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SEE: inside China’s largest gaming conference, China Joy