Summary
China announced new laws intended to limit microtransactions and prevent certain predatory practices by gaming companies, affecting the stocks of major Chinese corporations likeTencent. As the world’s largest video game vendor,Tencent’s market value experienced a long fall following the reveal of these new laws.
China’s biggest player in the gaming market has undergone massive growth over the last decade, withTencent buying up plenty of game studios likeDying Lightmaker Techland. China has become the largest gaming market in the world, with many of its players buying microtransactions. It seems that the Chinese government is worried about the popularity of such practices, and intends to keep it from growing out of control.
As reported by Reuters, Chinese lawmakers unveiled new laws pertaining to video games. These laws will ban rewards for spending money within a game for the first time, ban rewards for buying consecutive microtransactions, and ban rewards for daily log-ins. These practices have become commonplace in many free-to-play games. Also, these new laws will implement a cap on how much each player can spend within a game.
Following this news, Tencent Holdings' shares fell 16% at one point, and China’s next biggest gaming company, NetEase, fell as much as 25%. These drops make up the bulk of an $80 billion total selloff in China’s gaming market over the last 24 hours. This massive amount of money displays the scale of gaming in China and how lucrative it has become. The nation’s newest set of gaming laws comes after its2021 implementation of regulations intended to curb video game addictionamong minors.
Although it’s possible, it seems unlikely that similar laws will be implemented in the West. The practice has become intertwined with the successful free-to-play model, with nearly every game of that type offering a wide range of microtransactions.
Some players take serious issue with these practices, with oneNBA 2Kplayer filing a lawsuit against Take-Tworecently for its use of microtransactions. Although the implementation of this practice is largely unpopular and a far cry from gaming’s early days, the cat seems to be out of the bag. Free-to-play games have become some of the most popular titles in gaming, and microtransactions are one of the only reasons that these games are sustainable. However, some game studios have found a healthy balance, offering microtransactions in addition to unlockable rewards.
