Aftermath of China’s strictest video game age restriction mandate

Uncertainty looming upon the future of China’s Gaming industry.

Since The National Press and Publishing Administration enacted the strictest video game age restriction mandate, the industry is still digesting what the future might hold.

 

According to the new mandate, all video game content providers can only provide services to players under the age of 18 from 20:00 to 21:100 every Friday, Saturday, and Sunday, and also national holidays. This means a teenage player can only have 3 hours of game time every week.

 

Surprisingly, to investors, this mandate is hugely beneficial for the gaming industry in the short term. Since China never had a proper age rating system, most video games have to comply with the regulations to 'provide a healthy environment for minor players'. Now that the mandate is being enacted, many games can get around the previous regulations and include more provocative and explicit content.

 

Some people read this new mandate as eliminating any further risk from policy and regulation changes. September 1st is the first day under the new mandate, and the first day for kids to go to school after a long summer break. Most gaming company's stock prices are actually rising quite significantly.

(Note: red color in China means stock price rising)

 

According to 3rd party analysis, underage players only contribute a very small portion of revenue for most major game companies. Tencent Games' FY 2021 Q4 report shows only 6% of their gross income coming from underage players, and this portion is getting smaller. CFO of NetEase also claims that players under the age of 18 only contribute about 1% of the company's gross revenue from video games. All these statistics show that the gaming industry's short-term revenue would not be affected that much, even after losing most of the underage player base.

However, games that are designed for kids would not be so lucky. Games like Minecraft and Miniworld (a mixture of Minecraft and Roblox) will clearly suffer severe losses in income. Roblox has not officially launched in China and chances for that happening now is getting grim.

 

One interesting fact is that a popular early education software called "Baby Bus" is also incorporated into the age restriction system, and its 2~5-year-old users can only access its servers 3 hours a week. This means parents have to resort to more traditional early education tools and methods, and also sparked questions about this new mandate not considering many special use cases.

 

 

Esports also took a big shot, since most pro players start their career at a very young age, and many esports organizations paused the training program for underage players after the mandate. Professional leagues are also banning underage pro players from participating in matches and events.

 

The new age restriction mandate is not an isolating event. Normally there would be a monthly announcement declaring which new games have acquired publishing licenses to be legally distributed in China. However, such an announcement has not been made this August.

 


 

Despite the seemingly minimal impact in the short term, how this new mandate would affect China's gaming industry, in the long run, is yet to be seen. For any developer or publisher that wishes to have a slice of the pie in the Chinese gaming market, they really need to keep an eye on all Chinese government announcements and regulations about the gaming industry, since the market trend and user demographic might shift overnight due to these regulation changes.

 

 

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