Playtime is Over: China Limits Video Games Usage​

​
By Alison Catchpole​


The Story

On 31 August 2021, a sweeping ban was introduced for anyone under 18 in China on playing video games during the school week. The ban limits children to one hour of playing time on Fridays, Saturdays, Sundays and public holidays, and is to be upheld by gaming companies.

This is nothing new in China. In 2019, the government set a curfew, banning under-18 gamers from playing online between 22:00 and 08:00. Marketing agency Niko Partners estimate that of the 743.5 million people who play games in China, 110 million (some 15%) are under 18.

The Background

From 2000 to 2015, the Chinese government banned the sale of video games consoles (such as the Microsoft Xbox and Sony PlayStation), fearing their “negative influence” (Fortune). This coincided with the rise in smartphone use, and goes some way to explaining the dominance of mobile gaming in Asia.

The news also comes amid a variety of reforms in China focused on children: In July, online tutoring firms were prohibited from making a profit from teaching core subjects. In early August, state media outlet ‘Economic Information Daily’ (EID), affiliated with the official Xinhua news agency, published a damning article in which online games were likened to “spiritual opium”. Shares in the two domestic game publishers NetEase and Tencent dropped 10% the following day, but recovered some of the losses after EID deleted the piece. By the end of August, China had introduced a ban on exams for six- and seven-year-olds.

What It Means For Businesses And Law Firms

Weeks before the latest Chinese reforms, Google had announced a series of policy and product changes aimed at protecting children and young people, itself in the wake of Instagram’s increased protections for minors. In the UK, the Information Commissioner’s Office (ICO) Age Appropriate Design Code, AKA The Children’s Code, will come into force in September.

Legal concerns

Niko Partners predicts that China’s mobile games revenue will rise from the $29.2 billion of domestic mobile game revenue in 2020 to $40.5 billion by 2025. But the implications for security maintenance, intellectual property and regulation continue to be at issue.

The Esports segment, for example, is facing both familiar and newer legal concerns, particularly in relation to gambling (Skadden). 8AM Fund Manager Andy Merricks describes having “trimmed” his fund’s video games and esports ETF (Exchange Traded Fund) holdings in the wake of the regulatory crackdowns from Beijing (Investment Week).

The longer-term implications of withdrawing access to the gaming market may take time to unfurl, with the likelihood the rules will “squeeze the pipeline of future gamers” (Financial Times).