Proposals around loot boxes, daily rewards and spending limits announced by Chinese game regulators spooked investors and wiped almost $100bn in market value from game-makers like Tencent and NetEase at the end of 2023.
But there’s no need to panic, says loot box policy expert Leon Y. Xiao, a PhD Fellow at Copenhagen’s Center for Digital Play. “Some media sources have been somewhat irresponsible by failing to make clear that the proposals are indeed a draft and subject to change,” he told us.
“I have read reports that are phrased as if the rules are already in force. That is incorrect. This is only the start of a consultation process. Some rules contained in the draft are existing rules and are simply being repeated.”
Xiao also notes that the same regulator sent out a press release the day after the announcement of the draft proposals, stressing that China would “carefully study” industry responses during a consultation period. This was “probably upon seeing the negative feedback from the industry,” he says.
And as summarised neatly by The Wire China, multiple reports suggest the official in charge of the initial policy announcement has been fired – and it is against China’s interests to kneecap its powerful games businesses anyway.
One notable clause, proposing a ban on daily login rewards, was also singled out by China’s regulators in the follow-up announcement as a policy that needs “improvement”, says Xiao. Restrictions on daily spend also still require clarification.
“We definitely need to wait and see exactly what the new rules will be,” says Xiao. “I also believe the phrasing of some provisions needs to be tightened to ensure that companies cannot easily circumvent the rules.”
“It is important to emphasise that the rules do not apply beyond China,” Xiao continues. “I do not think Chinese companies’ games made for foreign markets will be affected. For example, games like Genshin Impact duly implement the national restrictions on how long under-18s can play on the Chinese server as required by regulation. However, no such measure is implemented elsewhere.”
There is, however, an overall sense that regulators are closing in on gacha-like mechanics, both in China and elsewhere. “The Chinese regulator is very brave, and should be commended for proposing to try certain harm minimisation or ethical game design measures,” adds Xiao.
“I think a lot of players, parents, caretakers, NGOs, policymakers, and members of the public in Western countries also want these measures, but imposing them is simply not politically possible. If these measures work well in China, other countries should consider emulating them.”
