A new notice from China’s Ministry of Education, and its impact on games

On August 30th 2018 the Ministry of Education issued a new notice aimed at preventing myopia, or near-sightedness, among children and adolescents. The notice also listed recommendations for regulatory bodies to carry out. The notice was issued because the increase in gaming and internet use among minors may be leading to higher rates of myopia. The notice aims to draw attention to the recommendations that aim to reduce the myopia rate among children and adolescents nationwide by more than 0.5 percentage points each year through to 2023.

Guidance issued to families, schools and health institutions calls for the creation of a healthy environment at home and school that encourages children to limit usage of electronic devices, such as mobile phones. Schools are being encouraged to ensure all students are educated about myopia, and electronic device time is regulated during school hours. Health institutions are being advised to standardize diagnostic treatment in order to catch myopia in children early. The Ministry of Education also issued recommendations to 8 regulatory bodies.

The State Administration of Press and Publication (SAPP), the regulator responsible for the approval of digital games in China, received three of the recommendations:

1) to continue strengthening current regulations that limit the amount of time that minors can play games online,
2) to investigate the implementation of an age ratings system for games, and
3) to limit the number of new online games that are approved for distribution.

The first two of these have been stated before in other regulatory notices. Regulations continue to be strengthened around limiting the amount of time that minors can play online. In addition to nationwide measures taken in past years, in 2017 Tencent introduced restrictions for its hit game Honor of Kings. Players under 12 years old were limited to one hour of game time per day and players 13-17 were limited to two hours per day. Regulators have also explored an age ratings system, and there has been one in place with colors (green, red, etc), but it was not enforced. China does not have a ratings entity, such as the ESRB in North America or PEGI in Europe. According to the Ministry of Education, these recommendations would ensure that minors have access to healthy content and do not spend too long engrossed in games that can lead to addiction and eventually myopia.

The third recommendation is new, and will possibly have the highest impact. It calls for a limit on the number of games to be approved by the SAPP for distribution across China. The text released is not as detailed as we expect to see, but the detailed policy will likely not be released until the end of September or later, depending on SAPP finishes implementing its institutional restructuring. We expect that game licensing will resume, to some extent, after the detailed policy is released – and at this point it is unclear if the policy will ultimately be restrictive or not.

According to Niko’s tracking, there were 8,561 games approved in 2017, including 8,202 mobile games, 169 PC client-based games, 135 PC webgames and 55 console games. 1,931 games were approved in Q1 2018, including 1,866 mobile games, 41 PC client-based games, 17 PC webgames and 7 console games.

SAPP halted issuance of games licenses in April 2018 while it began restructuring itself. In 2017, 37% of game licenses (equal to 3,175) were for poker & mah-jong games. In Q1 2018, 49.8% of game licenses (equal to 962) were for poker & mah-jong games. We think that most of the curtailment of future licenses would be for mobile games or perhaps poker & mah-jong, but the new regulations will probably not impact PC, console or even core esports and RPG mobile games. There are far fewer of such games in the market and in development, and the leading game companies will try to prioritize these moneymaking categories.

We think that if the third recommendation is implemented, smaller game companies with only a few potential hit titles would suffer more than larger ones. The top game companies would continue to strengthen their positions, as they have more AAA games, and more resources to support the game approval process. The export game market is more competitive, so more middle and small companies could go under if their game is not approved for domestic distribution.

On a positive note, the market has thousands of games, so if fewer licenses are granted then perhaps the game discovery process will become easier for gamers.

2018-09-11T07:48:54+00:00 August 30th, 2018|Categories: Uncategorized|

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  1. […] China’s Ministry of Education issued a notice on Thursday aimed at preventing myopia, or nearsightedness, among children and adolescents by limiting the screen time for mobile devices, PCs, and consoles, according to market researcher Niko Partners. […]

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