Draft rules on online gaming out for feedback
Shares of major Chinese online gaming companies including Tencent Holdings Ltd and NetEase Inc plunged on Friday after China issued draft guidelines aimed at curbing excessive spending on online gaming.
Tencent's shares tumbled 12.35 percent on the Hong Kong stock exchange, while shares of rival Net-Ease dropped 24.6 percent on Friday following the release of the new draft rules by the National Press and Publication Administration.
According to the rules, online games will not be allowed to offer incentives and rewards for daily logins, or first and consecutive in-game purchases. Game publishers will be prohibited from promoting or allowing high-priced transactions of virtual gaming items through speculation and auction, it said.
Other stipulations include limiting the recharge amount of users, and issuing pop-ups that warn them of irrational consumption behavior.
In addition, game publishers will be required to store their servers within China.
The administration is seeking public comment on the rules through Jan 22.
Tencent Games said the draft rules will not change the reasonable business models and operations of gaming companies.
It said the regulations offer more clarity about the country's supportive attitude toward the industry, and has provided guidance in encouraging high-quality original games.
The company said it will continue to strive for technological innovation and promote the high-quality development of China's gaming industry.
Zhang Shule, an independent commentator on the IT and gaming industry, said the new rules, which set spending limits for online games, might affect the revenues of gaming companies that rely on selling virtual gaming tools. It will make such companies overhaul their gaming design and monetization strategies.
He added that the new guideline will encourage game publishers to offer premium online games and innovative experiences to enhance user engagement and avoid irrational consumption, rather than by using in-game purchases.
