China’s New Regulations Cause Major Losses for Gaming Companies

New Regulations Impact Gaming Companies

China’s recent regulations on online and mobile games have had a significant impact on two of the country’s largest gaming companies, Tencent and Netease. These regulations have resulted in a market value loss of nearly $80 billion for these companies.

Changes to Daily Login Bonuses and Rewards

China declared on December 22 that daily login incentives and rewards would no longer be available for gaming. This change primarily affects players who spend money on games regularly. Daily login bonuses are a common feature in many games, such as Pokémon Unite, Call of Duty: Mobile and Pokémon Masters EX, as they encourage players to log in and play every day.

China’s History of Game Regulations

This is not the first time China has imposed limits on games. The country has been cracking down on video games for a while now. Previously, they introduced limits on the amount of time people under the age of 18 can play games due to concerns about addiction. Now, their focus is on limiting in-game spending by players. Additionally, game developers are required to set limits on the amount of money players can add to their digital wallets.

Impact on Players and Gaming Companies

While these regulations may be seen as a positive step by some parents who worry about their children developing gambling addictions, they have caused significant losses for gaming companies. Tencent, the largest gaming company in the industry, has reportedly lost over $43 billion, with its shares dropping by 16 percent. NetEase has been hit even harder, experiencing a 25 percent drop in its shares.

Forced Changes in Game Design and Monetization

Analyst Ivan Su from Morningstar predicts that gaming companies will be forced to make major changes to their game design and monetization strategies as a result of these regulations. It is highly likely that they will see a significant decrease in active daily users and in-game revenue.