China View: Have Harsh Measures Hampered The Development Of The Video Game Industry?
zhang kaiyv
The video game industry in China has been developing rapidly in recent decades with the rise of consoles such as Xbox and PlayStation as well as mobile gaming. The industry has also become an important economic sector in the country, with an estimated 666 million players in 2020 with total sales revenue of RMB 296.5 billion (approximately $46.6 billion) in 2021, making China one of the world's largest markets for electronic games. However, since the 1970s when video games began to gain global popularity, the government has closely monitored and regulated the import, production, and consumption of these goods. Regulations have continued to tighten over time as the industry has continued to grow. Recent policies have involved limiting the accessibility to gaming by controlling the time and consumption of users. Authorities have also suspended the approval of video games for publication.
The government has justified such actions by claiming these laws help to address the rise of video game addiction, specifically among minors and younger people. The government has publicly stated that the excessive use of video games has negative consequences such as impaired interpersonal relationships, decrease in work and educational performance, as well as neglected personal hygiene. While these policies have been effective in curbing the usage of video games, it is unclear whether it has helped to improve the health of younger people. Additionally, there are concerns that these harsh policies and negative framing of video games has adversely impacted the growth and development of the domestic gaming and technology industry. How have local companies reacted to these policies?
During the 1970s, arcade video games and consoles were gaining in popularity around the world with the rise of companies such as Nintendo, Sony, and Sega. While many countries openly accepted this new wave of technology, the Chinese government was more cautious. Shortly after the country opened up to foreign trade in 1978, the government implemented tariffs and taxes on video game console imports, which briefly stunted the growth of the industry in China. Eventually, the popularity of games and consoles began to grow despite limited availability. During this early period, the government, local media, and a sizable portion of Chinese society viewed the gaming industry negatively, commonly referring to video games as “digital heroin” or “contamination of spiritual civilization”. With the rising popularity of video games also came a growing number of parents with concerns about the use of video games and its impact on child development. In response to these concerns, the government imposed a ban on console and arcade games in 2000, which included restricting imports, domestic manufacturing, and sales.
During this time the government also began to closely monitor the growth of the online gaming industry and its potential implications. In 2002 the government mandated that all digital games must be approved by authorities before publishing, which marked the beginning of video game content restrictions in the country. During the early 2000s, the government also began enacting regulations to directly restrict the playtime of minors. Other policies included restrictions on the production, import, and sale of gaming consoles and arcade. In 2000, the government led crack downs against “places for electronic game business,” to enforce bans on the sale and importation of game equipment and accessories. Specifically, these crack downs targeted Internet cafes or wangbas. These businesses were primarily targeted because they “jeopardize the healthy growth of teenagers and massively disturb the social order.” In 2007, the government also implemented a regulation requiring online game providers to monitor their users’ playtime and discourage underage users from playing for prolonged periods of time.
“Beijing’s crackdowns on the gaming industry have been fairly consistent about protecting minors. Historically, the authorities have always had the intention to curb exposure from what they perceive to be a highly-addictive habit,”
- Rui Ma, China tech Analyst
Between 2000 and 2014, authorities banned the sale and import of video game consoles, but these restrictions were ineffective in stunting the growth and popularity of games. These efforts aimed to prevent potential negatives of video addiction and may have been implemented to help the local video game companies grow with less competition from international manufacturers. Since 2015, many new game companies have been established around the country, which has led to increased government monitoring and regulation. To address concerns regarding microtransactions and in-game purchases that were often portrayed as a form of gambling, China became one of the first countries to impose regulation on the purchasing of loot boxes, which are randomized virtual items in video games that players can purchase or earn through gameplay. This law required video game companies to disclose the probabilities of obtaining randomized rewards from loot boxes to increase transparency and enhance consumer protection.
In recent years, authorities have required users to display their real name and phone number in order to play, which has improved the monitoring and regulation of playing time. The National Press and Publication Administration of China (NPPA), is in charge of the administration of press, publication, and copyright throughout the country. Since 2005, NPPA has drafted the Development Standards and the Real-Name Authentication Scheme of Online Game Anti-Addiction System Effective November 2019, which tightened restrictions on the amount of time and money that minors could spend on games. In the same year, the ‘Notice on the Prevention of Online Gaming Addiction in Juveniles’ was passed, which required online video game providers to both prevent “individuals under the age of 18 from playing for more than 1.5 hours each day (or 3 hours on a public holiday) and prevent these users from playing between the hours of 22:00 and 08:00”. This law was later expanded in 2021 to limit minors to an hour of daily playtime between 8 pm to 9 pm on Fridays, weekends, and official holidays.
Recent policies have also constrained the development of the game industry. In 2018, authorities implemented a nine-month-long suspension on game approvals, which meant that no new games could be approved for release during this period. This not only prevented game companies from releasing new products, but also further exacerbated negative public perceptions of the industry. Eventually game approvals resumed in December 2018, but the suspension had far-reaching implications on government subsequent policies on the gaming industry. “The policy effectively restructured the structure and functions of China's domestic game review bodies, resulting in ultimately stricter standards for game approval”. Even after the resumption of game approval, the number of approved games sharply decreased. 8,577 domestic games received license numbers in 2017, while only 1,570 games received approval in 2019.
Due to harsh regulations, especially regarding restrictions inhibiting the playtime of young users, game companies have also been forced to redesign their products to still be appealing and profitable. While large technology companies such as Tencent, who occupy 40% of the market, have not seen a drastic decline in video games sales, smaller companies are struggling to survive. However, there are signs that the gaming industry is growing. The recent release of the game Black Myth: Wukong in August of 2024 received massive praise locally and around the world. Developed by the Chinese video game company Game Science, the game sold more than 10 million copies in just under four days.
