On December 22, 2023, China’s National Press and Publication Administration (国家新闻出版总署) (the “NPPA”) released for public comment a draft of the Online Game Administrative Measures (网络游戏管理办法) (the “Draft Measures”), which included spending limits and prohibitions on rewards to entice frequent gameplay. In reaction to the Draft Measures, the market capitalization of China’s leading game companies fell by nearly US$80 billion. Although the new Draft Measures largely restate existing rules and practices, the new spending limits and prohibitions on frequent use incentives alarmed investors who have fresh memories of regulatory crackdowns on the tech sector in general and the game industry in specific.
In this article we first provide background on the existing rules and practices in China’s video game industry. Then we look at the content of the Draft Measures, indicating which elements restate existing regulations and market practice, and which elements are new, with special focus on the one new rule that was directly responsible for the large drop in video game stock prices.