According to those familiar with the situation, Beijing is moving swiftly to allay concerns about yet another regulatory crackdown on the country’s video game sector. This includes the sudden appointment of a new commissioner and the dismissal of a well-known official. Following the National Press and Publication Administration’s proposal of recommendations last month that recommended significantly stricter regulations on the largest gaming industry in the world, shares of the two main online gaming companies, Tencent and NetEase, plummeted precipitously.
After the regulator authorized the release of 105 games the most in 17 months and declared that it would promote the “healthy development” of the business and evaluate feedback on its plans, the stocks staged a modest rebound at the end of December. At the end of the month, Beijing also fired the chief of the Communist Party’s publicity department’s publication office, which oversees the nation’s gambling regulating agency, according to four individuals with direct knowledge of the situation.
Senior official Feng Shixin was observed at gatherings debating the approval of video games and the necessity of real-name verification for players. According to two persons close to the regulator, he lost his job because, before releasing the draft, he did not seek the advice of important gaming firms or senior economic supervisors. A request for a response from the publicity department was not answered.
Unprecedented Regulatory Proposal Sparks Controversy and Executive Firings
An individual with firsthand knowledge of the situation stated, “This proposal was shocking because there was insufficient prior communication and the terms were extremely stringent, even though the rising regulatory power in the gaming industry was widely anticipated.”Feng was fired, as originally reported by Reuters.
“We were previously informed that the majority of the regulations would pertain to children. But a lot of the tight guidelines in the final draft ended up controlling every user, which really worried us,” an executive from a start-up gaming company who wished to remain anonymous said.
The purpose of the proposed rules is to reduce spending and gaming activity on the internet. At the start of 2021, the draft—which had been in the works for a while—was first shown to video game developers and industry insiders.
Two persons with knowledge of the 2021 draft report that the version that was made public last month was very different from the one that was previously available, with more specific instructions and a marked increase in oversight. Following its release, the government’s handling of the crisis was widely criticized and the stock market saw a $80 billion sell-off.
According to four people familiar with the matter, Beijing and provincial authorities have now called for closed-door seminars with leading game creators to evaluate the viability and implications of the draft legislation. According to two individuals close to the regulators, the procedure might be finished as early as the end of January, compared to the three to six months it usually takes.
China’s video game sector has been gradually rebounding from the 2021 regulations that restricted the amount of time children may spend playing video games. The NPPA had stopped approving new video game licenses, and it didn’t start doing so again until April 2022.
