In February 2020 we published Game regulations in China: everything you need to know as a comprehensive resource for our readers.
With the majority of new regulations in place, our observation now is that China’s SAPP has shifted to enforcement, including potentially closing loopholes that have been around for years.
We base our analysis on recent game regulation news that indicates the shift to enforcement:
- Apple sent out a notice to developers on February 24, 2020 which asks them to submit an ISBN (license number) by June 30, 2020 for all paid games or games that offer an in-app purchase. This law was introduced in 2016, yet the iOS app store still contains unlicensed games. It is unclear if Apple will remove older unlicensed titles launched prior to June 2020, but it is indeed clear that they will close an existing loophole for new title launches and require that all games provide a license number before they go live on the China App Store.
- Bytedance released a notice February 24th stating that it would no longer advertise unlicensed games. The notice requires game developers who wish to advertise their games on Bytedance apps like Douyin/TikTok, which have over 400 million daily active users, to submit a license number by March 6th. Advertisers rely on Bytedance apps for user acquisition.
- On February 26th the Beijing Propaganda Department held a conference to announce various new measures it would take to strengthen game regulations. They announced collaboration with the SAPP to investigate game developers and publishers that have failed to obtain a license number or are operating games with illegal content. Games without a license number would be removed and games with a license number that have illegal content would be removed and required to resubmit the title for approval.
- On March 3rd the China Consumers Association (CCA) published a notice titled “Online Game Operators and Protection of Consumer Rights”. The notice states that online game companies have issued misleading advertisements promoting content that is not included in the game. The CCA has said that it plans to crack down on misleading advertisements and will fine game operators 3-5x the cost of the advert, and a game operator could have its business license revoked.
- On March 11th the Shenzhen Securities Regulations Commission announced it had conducted an investigation into RenZixing Network Technology and found that the company was operating 159 games without license numbers. The investigation also found that the company had failed to disclose various acquisition information and had flaws in reporting earned revenue. RenZixing has been ordered to cease the illegal operations or be closed down. The regulations commission will continue to conduct investigations into companies that are not adhering to regulations.
- On March 12th the SAPP issued a notice to clarify implementation procedures for anti-addiction regulations for minors found in the November 2019 ‘Notice on Preventing Addiction Among Minors in Online Games’. Requirements included a real name registration system in all games, a limit on the amount of time and money that minors can spend in game and the introduction of age rating guidance for games.
Small and medium sized game developers will be most impacted by this tightening of regulations while larger companies may benefit from them in the long term, as the market continues to consolidate. We note that it is now more important than ever for foreign and domestic developers to adhere to the regulations, even those which had previously been stated but not enforced.
Longer more detailed analysis of each regulation is available to clients upon request.