China’s Gaming Crackdown Speaks to Regulatory Trends Around the World

China’s Gaming Crackdown Speaks Regulatory Trends
Yinchen Niu/VIP; Stock Images

The global video games industry, estimated to bring in $176 billion in 2021, has been taking heat from its largest market.

At the end of August, the Chinese government limited video gaming for minors by banning gameplay on weekdays and restricting gameplay on weekends to one-hour blocks on Friday, Saturday and Sunday nights, as well as national holidays.

This marks a tightening of rules from 2019, when China set a 90-minute time limit for gaming on weekdays and restricted gameplay between 10 p.m. and 8 a.m. on weekends, citing complaints from parents ahead of the school year as the motivation behind the new rules.

It’s true that gamers ages 10-24 represent the most active demographic, averaging above seven hours of gameplay each week, per a 2021 Newzoo report.

But China’s move to regulate needs to be understood in the context of other moves around the globe.

Similar to what China had in place earlier, South Korea had been blocking gameplay for minors between midnight and 6 a.m. but moved to end this policy in favor of having parents set limits for their kids.

South Korea’s law was enacted primarily in response to PC gaming, an area where Chinese company NetEase is focused. Another Chinese force in gaming, Tencent, has soared to the top of the gaming pedestal via its command of mobile gaming.

Naturally, China’s restrictions have resulted in recurrent stock slumps for NetEase and Tencent. Tencent is no stranger to pressure at the top, as the company has been ensnared in a wider push by China to regulate Tencent, Baidu and other major tech leaders that have monopolized the local online economy.

The same week young gamers saw war waged on their favorite activity, Apple settled a wide-ranging class action lawsuit in the U.S. filed by a host of web developers frustrated with the 30% cut the tech leader takes from purchases made within apps on its iOS App Store.

Per the terms of the settlement, Apple can no longer penalize third-party developers for directing users of their apps to outside payment methods, though doing so within the apps themselves is still a hard no for Apple, which famously banned “Fortnite” from the App Store for such a violation, resulting in Epic’s ongoing lawsuit against Apple.

Meanwhile, the National Assembly of South Korea just passed a law aiming to force Apple and Google to allow developers to advertise their own payment methods within apps.

This is a good implication for Epic’s battle with Apple, but it comes at a time when the U.K. has increased scrutiny of a live-service revenue source known as “loot boxes,” which are bundles of randomized digital items available for purchase via in-game or actual currency within games like “Fortnite.”

A research briefing filed in the U.K. Parliament’s House of Commons in August details concerns over the practice playing a heavy role in a revenue source that is expected to pass $100 billion in 2021, following the government’s call in 2020 for evidence supporting the notion that loot boxes instill negative psychological tendencies akin to gambling in minors.

Such in-game spending has already become a reliable revenue source for top publishers. Should the U.K. gain the ability to regulate this, other nations could seek to do so as well. A California judge even brought up this issue during the first leg of Epic v. Apple, criticizing Epic’s ideal payment system as one seeking to uphold “impulse purchases” for gamers.

If China sees success in curbing gaming among children as it also seeks to reduce its own tech monopolies, don’t be surprised if such regulatory concern for minors makes its way across the Pacific.