The National Press and Publication Administration (NPPA), the Chinese government regulator for video games, issued a new rule today that emphasizes the restriction of how much time youth gamers are allowed to play. The new rule states that people under 18 years old will be allowed to play online video games only on Friday, Saturday, Sunday and legal holidays, for one hour per day between 8pm and 9pm. This limits minors to 3 hours of online gaming per week, which is considerably stricter than the previous policy that limited online gaming to 13.5 hours per week. What was already quite limited has just become nearly impossible, and the specific hours of 8pm-9pm are important too – because one could imagine that parents might not want their children to have screen time at that hour of the day.
On the other hand, this is not a law (laws must be issued by the People’s Congress), it is a policy that the NPPA is requiring game publishers to comply with and requesting parents to support. Parents could overrule in their own households, if they enable the child to use their adult account, but the government requests that the parents work together. This could be part of the goals of “common prosperity” that have been discussed in recent weeks. The NPPA declared that these changes must be implemented in all games by September 1, and most major Chinese game publishers have already issued notices informing users they will issue the new rule changes.
Gaming addiction among minors in China has been a topic that regulators have wrestled with for more than 15 years, with the first anti-addiction systems originally proposed in 2005. The most recent ruling, introduced in 2019, stated that minors could only play online games between 8am and 10pm for 1.5 hours on regular days and 3 hours on holidays. This anti-addiction system was backed by the implementation of a real name identification system which checked user IDs in real time against a national citizen database provided by the Ministry of Public Security. All game developers have had to ensure they were compliant with these restrictions and have implemented the real name identification system by June 1, 2021. Similarly, all internet cafés are legally for 18+ year olds only, and legal opening hours are 8am-midnight, though many cafés find their way around that.
Loopholes in the current system, such as minors using the accounts of adult family members or even purchasing a fake adult ID to play games, have led to increased criticism by the media over the effectiveness of the systems. This criticism was amplified over the past month as multiple outlets wrote about the issue of gaming addiction among minors. Companies such as Tencent have been experimenting with facial recognition systems and AI to detect whether minors were attempting to circumvent restrictions. While China’s government has been positive on video games recently and has promoted segments such as esports and cloud gaming as key growth areas, gaming addiction among minors is viewed as a negative output of the popularity of video games in society.
This is preliminary analysis, yet some impacts of this latest policy could be:
- There could be a decline in the number of gamers under age 18, from the current level of 110 million
- There should not be much impact on the revenue generated by gamers under age 18, because it is minimal already (as youth gamers already had restrictions on time and spend from previous rulings). Tencent, which introduced anti-addiction systems before every other company, notes that only 2.6% of its revenue is from players under 16. Other companies have provided similar figures in the 1% to 5% range.
- Parents who adhere to the new policy may also restrict their own gaming while around their children.
- Parents who adhere to the new policy may not want their kids playing games right before bedtime and may say no games at all.
- While minors are ever resourceful and will find ways to play games using existing or new loopholes, the utilization of AI and facial recognition technologies by game firms could permanently close these loopholes altogether.
- A solution that only allows for 3 hours of game time per week, at extremely specific hours, could discourage minors to take up gaming as a hobby or career.
- It is unclear how this will impact the pro esports scene in China which requires players to train for hours per day at a young age to play games. This is at the same time as a rally behind the idea of esports becoming an Olympic sport.
- It also raises questions over whether minors will find complex games fun when they turn 18, having had little interaction with games prior.
- Large game companies, such as Tencent and NetEase, also have technology divisions that have VPN and other services. Youth gamers may bypass the new rule by logging into global servers via VPN and avoid the time limits.
- Streaming video companies may benefit, and of course Tencent has streaming video too. Minors who comply with the game time limits may fill their free time with streaming video, even more so than they do now. Streaming video time is restricted for minors already, yet not as much as the new rule on gaming.
- We reiterate that the NPPA has been primarily focused on curbing gaming addiction among minors. This ruling is the strictest one to date and will essentially wipe out most spending from minors, which we note was already extremely low at this point. We do not expect to see additional regulatory measures in regard to other aspects of the video game industry, as the focus has primarily been on minors. Other broader reforms were already carried out in 2018. As the existing anti-addiction system is already in place and has been for all companies, the cost of updating this to reflect the new measures will be minimal for gaming publishers. Niko Partners will continue to follow the regulations and video game industry in China closely and will provide our clients our insights and analysis.
OVERVIEW FROM NPPA
When providing online game services to minors (under 18), all online game companies can only provide one hour services to minors from 20:00 to 21:00 on Friday, Saturday, Sunday and Legal Holidays, and must not provide online game services to minors in any form at other times
Real name registration and login requirements must be implemented, Game operators must not provide services to users without real name registration and login in any form
Online game companies that have not strictly implemented this policy shall be seriously dealt with according to law and regulations
Family, school and other social aspects must work together to establish healthy gaming habits
The restrictions must be implemented by September 1, 2021