September 22, 2021

China Limits Online Videogames to Three Hours a Week for Young People


SINGAPORE—China has a new rule for the country’s hundreds of millions of young gamers: No online videogames during the school week, and one hour a day on Fridays, weekends and public holidays.

China on Monday issued strict new measures aimed at curbing what authorities describe as youth videogame addiction, which they blame for a host of societal ills, including distracting young people from school and family responsibilities.

The new regulation, unveiled by the National Press and Publication Administration, will ban minors, defined as those under 18 years of age, from playing online videogames entirely between Monday and Thursday. On the other three days of the week, and on public holidays, they will be only permitted to play between 8 p.m. and 9 p.m.

The government announcement said all online videogames will be required to connect to an “anti-addiction” system operated by the National Press and Publication Administration. The regulation, which takes effect on Wednesday, will require all users to register using their real names and government-issued identification documents.

Other details of enforcement weren’t made public, and phone calls to the National Press and Publication Administration went unanswered after business hours on Monday.

China’s Tencent is backing the developers of blockbuster videogames such as ‘Pokémon Unite,’ ’League of Legends’ and ‘Fortnite.’ But Beijing’s regulatory crackdown on its tech giants could affect the company’s global videogame empire. Photo composite: Sharon Shi

In response to previous moves by the government to limit videogame playing by young people,

Tencent Holdings Ltd.

, the world’s largest videogame company by revenue, has used a combination of technologies that, for example, automatically boot off players after a certain period and use facial-recognition technology to ensure that registered users are using their proper credentials.

In restricting online videogame play for younger people, the government is seeking to “effectively protect the physical and mental health of minors,” China’s state-run Xinhua News Agency said Monday.

The People’s Daily, the Communist Party’s principal newspaper, said in a commentary that there was no room for compromise and negotiation on the new measures. In regulating the videogame industry, the commentary read, “the signal sent by this move is very clear—the government can be ‘ruthless.’”

Monday’s new rule is likely to be felt through China’s online games industry, one of the world’s largest. The new curbs come as the Chinese government seeks to rein in China’s technology industry, a campaign that has ignited a trillion-dollar selloff in Chinese equities and hit a range of businesses, including for-profit education providers, ride-hailing services and e-commerce platforms.

“This ruling is certainly extremely harsh and will essentially wipe out most spending from minors,” said

Daniel Ahmad,

a London-based senior analyst at Niko Partners who tracks the Chinese videogame market.

Mr. Ahmad said the new rules appear to apply only to online videogames since the rules involve a real-name registration system embedded before download—conditions that aren’t possible for offline games.

The measures follow a string of regulatory actions targeting China’s biggest technology giants for alleged antitrust violations.

In a separate move Monday, China’s main antitrust regulator, the State Administration for Market Regulation, said that it is launching a review of Chinese food-delivery giant

Meituan’s

2018 acquisition of bike-sharing firm Mobike.

The new restrictions targeting videogames, however, highlight the emphasis that Beijing has placed on cultivating morality in its youth, a preoccupation of senior officials that has come to the fore in recent weeks. Over the past month, a number of celebrities—some of whom have generated headlines for alleged sexual and other misconduct—have had their internet presences disappear overnight, amid state-media calls to better protect young people from being led astray.

Videogames have become a particular object of ire as Beijing seeks to reshape an industry it has described as motivated by profit at the expense of public morals. A state-media outlet this month triggered a selloff in shares of Tencent, after it published an article that described online games as “opium for the mind.”

Chinese leader

Xi Jinping,

too, has warned publicly in recent months about the perils of youth videogame addiction, remarks that have put more pressure on officials to act.

After the regulations were published on Monday, following the close of stock-market trading, Tencent said it had introduced a variety of new functions to better protect minors. It vowed to continue to do so as it “strictly abides by and actively implements the latest requirements from Chinese authorities.”

Tencent backs some of the biggest videogames in the industry and has invested in “Fortnite” maker Epic Games Inc. and “World of Warcraft” creator

Activision Blizzard Inc.

Shares of Chinese-based videogaming companies listed in the U.S. pulled back modestly Monday. American depositary receipts for Tencent fell 1.1%, NetEase Inc. slid 3.4% and Bilibili Inc. pulled back 1.6%.

Widening regulatory crackdowns have caused some investors to rethink their portfolios. Individual investors, however, have used the fall in at least one company—the U.S.-traded American depositary receipts for

Alibaba Group Holding Ltd.

—as a buying opportunity.

Individual investors purchased a net $550.7 million of Alibaba shares in the past month ended Friday, according to data from Vanda Research’s VandaTrack, making it the third-most purchased stock by the group during the period.

The impact on U.S. game makers from the government’s decision is expected to be somewhat limited, given their indirect exposure to the Chinese market. Beijing treats videogames as publications and imposes its censorship rules on videogames before they can be sold in China.

Over the years, U.S. companies such as Activision Blizzard and

Take-Two Interactive Software Inc.

looking for access to the Chinese market have teamed up with domestic technology giants such as Tencent, which have served as distributors for foreign-made games.

Roblox Corp.

entered into a joint venture with Tencent in 2019 to help bring a version of its videogame platform to users in China.

Shares in Activision Blizzard and Take-Two closed 1.6% and 1.2% lower, respectively, in Monday trading, as the broader Nasdaq Composite market ticked higher. Roblox shares fell 4.1%. Activision, Take-Two didn’t respond to requests for comment.

In 2018, China stopped issuing videogame licenses for almost nine months amid similar concerns, costing Tencent more than $1 billion in lost sales, according to analyst estimates, and leading to a prolonged slump in its share price.

In 2019, the government banned users younger than 18 from playing videogames between 10 p.m. and 8 a.m., and restricted them from playing more than 90 minutes of videogames on weekdays. Users between 16 and 18 years old aren’t permitted to spend more than 400 yuan, the equivalent of about $60, each month on videogames.

Tencent President

Martin Lau

warned during an earnings call this month that regulators are focused on limiting the amount of time and money that minors devote to online games across all platforms.

The company also said minors were only a small percentage of its online game revenue. Players under the age of 16 accounted for just 2.6% of its gross game receipts in China during the April-to-June quarter, it said, a quarter in which the company’s electronic-game revenue rose at its slowest pace since 2019.

Write to Keith Zhai at keith.zhai@wsj.com

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