Tencent’s Stock Fell by 12% as China Issues Ban on Game Mechanics that Induces Spending & Addiction

China's National Press and Publication Administration (NPPA) is banning online game operators from setting inductive rewards to misguide consumers.
Tencent Games News Feature
Image: Tencent

The Hong Kong-based online gaming giant, Tencent, and other Chinese video game companies have suffered significant losses, amounting to billions of dollars, due to the introduction of a new rule by China’s National Press and Publication Administration (NPPA). The rule prohibits online game operators from setting inductive rewards to misguide consumers.

The NPPA has recently released the “Online Game Management Measures” and is currently seeking public opinions on the matter. The rule explicitly forbids online games from incorporating inductive rewards such as daily login bonuses, first-time recharge incentives, and continuous recharge. Additionally, it prohibits online game publishing units from endorsing high-priced transactions in virtual items through speculation, auctions, and similar mechanisms. It also mandates pop-up warnings for users engaging in irrational consumption behavior.

With the new online gaming rules, Tencent’s stock took a hit, plummeting by 12.4%, resulting in a staggering loss of 367 billion Hong Kong dollars ($47 billion) in market value. Another Hong Kong-based gaming giant, NetEase, saw a considerable decline of 25% in afternoon trade. Notably, both companies are engaged in providing online video game services, featuring titles associated with major franchises such as League of Legends, PUBG, Dead by Daylight, and others.

Recognized as one of the world’s largest video game markets, authorities in China have long been worried about gaming and internet addiction among its young people. In 2021, China even imposed regulations restricting minors to a maximum of three hours per week for video game usage, citing the need to combat gaming addiction.

This recent regulatory move has sparked concern among gaming consumers beyond China’s borders. Companies like Genshin Impact developer HoYoverse, with a significant international user base and rely on mechanics such as daily login rewards and initial top-up incentives, are now at risk of being impacted by China’s strict regulations. However, the extent of the influence on the global gaming community remains uncertain.

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Shemiah Ruina

Shemiah Ruina

Shemiah is a gaming niche writer and an Electronics Engineering graduate at the Technological University of the Philippines. She plays a lot of RPGs and FPS games. She also enjoys watching movies and anime.

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