Shortly after shaking up its domestic video games market, Chinese regulators have approved over a hundred games for sale and play within the overseas country.
China is an incredibly lucrative market for video games publishers and developers, but only if their games adhere to the country's strict rules and regulations. China is notoriously fickle and requires game-makers to abide by controlled policies that are aimed at regulating how much time and money Chinese citizens spend on video games.
The National Press and Publication Administration recently published a draft of rules that, if implemented and made into law, would shake up the video games market. Under the new rules, game-makers would be forced to cap player spending in games, cut out all daily login rewards, and any items that are included in blind-bag style lootboxes would also have to be offered for direct purchase. Also, any kind of promotion of big-earning lootboxes would be prohibited.
These rules are a stark contrast to the United States, which is ruled by a kind of Wild West frontier law when it comes to microtransactions and in-game purchases.
This draft shocked investors, leading to an $80 billion stock sell-off across China's two biggest games companies, Tencent and NetEase.
The new rules also force a strict 60-day approval process for new games, and as a kind of punctuation to this point, China's NPPA approved a batch of 105 games. These titles were games made domestically by Chinese video games firms.
It's unclear whether or not the NPPA will reverse course on the rules, and the administration is taking feedback until January 2024. The $80 billion market cap wipe from Tencent and NetEase could trigger cost-saving measures and potentially lead to layoffs, studio closures, and/or project cancellations.