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China to tighten controls on video gaming industry, prompting sell-off in Tencent and NetEase shares

  • The National Press and Publication Administration’s draft rules bar online games from offering rewards that entice users to play and spend excessively
  • The industry regulator is seeking public comments on the draft regulation until January 22

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All video games operating in China must put a cap on how much players can top up their accounts and alert users about “irrational consumption behaviour”, according to a draft regulation published on Friday. Photo: Shutterstock
Xinmei Shenin Hong KongandAnn Caoin Shanghai
Beijing is moving to curb excessive spending on video games across the country, according to a new draft regulation, dealing another blow to the world’s largest video gaming market that is still recovering from the government’s previous industry crackdown.
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Online games must not offer rewards that entice people to excessively play and spend, including those for daily logins and topping up accounts with additional funds, according to draft rules published on Friday by industry regulator the National Press and Publication Administration (NPPA).

All video games must put a cap on how much players can top up their accounts and alert users about “irrational consumption behaviour” via a pop-up window, according to the NPPA.

The proposed regulation immediately prompted investors to dump shares in major Chinese video gaming stocks.

Tencent Holdings, the world’s largest video gaming company by revenue, saw its shares close down 12 per cent to HK$274 on Friday, wiping out about HK$300 billion worth of value, while NetEase lost 27 per cent in pre-market trading in the US. All gaming-related stocks plunged in Hong Kong on Friday, with Bilibili shedding 10.4 per cent.

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The NPPA, which has also directed video game operators to meet a range of requirements covering content moderation and users’ real-name verification, is seeking public comments on the draft rules until January 22.

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