China targets in-game spending, daily rewards in new game regulation rules

Chinese regulators revealed a new set of rules meant to reduce spending and in-game rewards for video games. Not long after this news, Tencent and NetEase shares fell by 14-16 percent each, indicating how serious these changes may be.

Per Reuters, online games will no longer be allowed to give players in-game rewards for logging on every day. They will also be prohibited from rewarding players for first-time spending or repeatedly buying in-game items.

Further, games would be banned from giving probability-based draw features to minors, and from allowing the auction of in-game items.

Given how many live service and mobile games tend to have one (or all) of these features in some measure, this would be a sizable change to how games are made (and run) in China.

China has tried for years to put restrictions on games to prevent addiction in younger players. Many of these related to playtime, but these new rules indicate it's now tackling the problem from both angles.

Analyst Ivan Su told Reuters the limits would likely reduce daily active users and in-game spending. By doing so, developers would have to overhaul their game and monetization design.

Alongside those rules is a proposal that would require regulators to process game approvals within a 60-day timeframe.

The public can provide comment on these new rules from now through January 22, 2024. At time of writing, the changes are pending, and there's no set date for them to go into full effect.