Red Star Capital Bureau reported on December 22 that the National Press and Publication Administration issued a "Notice on Publicly Soliciting Opinions on the Measures for the Administration of Online Games (Draft for Solicitation of Comments)" on its official website, which made relevant provisions on the publication and operation of online games, operations, and the protection of minors, including that online games shall not set up inducing rewards such as daily login, first recharge, and continuous recharge, and online game live broadcasts shall not have high rewards.
On the same day, Hong Kong game stocks crashed, as of the close, NetEase (9999. HK) fell more than 24%, and Tencent Holdings (0700. HK) fell more than 12%. The A-share online game sector opened sharply in the afternoon, closing down more than 10%, and about 10 stocks fell to the limit, including Yao Ji Technology (002605. SZ), Sanqi Mutual Entertainment (002555. SZ), Gigabit (603444. SH) and so on.
Regarding the impact of the draft on the online game industry, a practitioner in the game industry in Chengdu, Sichuan Province, told the Red Star Capital Bureau that the impact lies in the regulation of "setting limits on user recharge". He explained that the current online game only has a limit on the recharge of minors, which is in the range of several hundred yuan. If there is also a limit for adults, it will have a great impact on the game that relies on krypton players to survive in uniforms, and many small companies in the industry are in this model.
The online game industry ushered in strong regulation
User deposit limits must be set and inducing rewards must be prohibited
On December 22, the National Press and Publication Administration solicited public comments on the "Measures for the Administration of Online Games (Draft for Solicitation of Comments)" (hereinafter referred to as the "Measures").
The "Measures" mentions the relevant content about game version numbers: [Prohibition of buying, selling, and applying version numbers] No unit or individual may lend, lease, buy, sell, or apply the "Online Publishing Service License", online game approval number, or publication number in any form.
At the same time, the "Measures" also clearly stipulate [restricting excessive use and high consumption of games]: online games shall not set up inducing rewards such as daily login, first recharge, and continuous recharge. Online game publishing business units must not provide or condone high-priced transactions of virtual props through methods such as speculation or auctions. All online games must set user recharge limits and publicize them in their service rules, and pop-up warnings should be given to users' irrational consumption behaviors.
In addition, in view of the popular lottery consumption methods in mobile games, the Measures mention that when providing random drawing services, online game publishing business entities should make reasonable settings for the number and probability of drawing, and must not induce online game users to consume excessively. At the same time, users should be provided with other ways to obtain virtual props and value-added services with the same performance, such as exchanging virtual props and purchasing online game currency directly.
With regard to the transactions related to game currency, the Measures require that real-name e-RMB wallets should be used to conduct online game currency transactions, and anonymous e-RMB wallet trading services should not be provided to users, and the same enterprise should not operate online game currency issuance and online game currency trading services at the same time.
In terms of publicity and promotion, the "Measures" require that there shall be no high rewards in the live broadcast of online games.
It is worth mentioning that Chapter 4 of the Measures focuses on the protection of minors: strictly control the time period and duration of minors' use of online games, do not provide minors with account rental and sales, game currency and virtual props trading services, as well as third-party services such as sparring and playing, must not provide minors with random selection services, and must not provide minors with tips in online game live broadcasts.
NetEase, Tencent and other game stocks fell sharply
How big was the impact? A number of companies were quick to respond
On the afternoon of December 22, the stock prices of game stocks, including Tencent and NetEase, continued to fall. As of the close, NetEase's share price fell 24.60%, and its market value evaporated by nearly HK $130 billion, Tencent's share price fell 12.35%, and Bilibili (09626. HK) fell by 9.67%.
The A-share online game sector opened sharply in the afternoon, closing down more than 10%, and about 10 stocks fell to the limit, including Yao Ji Technology (002605. SZ), Sanqi Mutual Entertainment (002555. SZ), Gigabit (603444. SH) and so on.
In addition, a number of game-themed ETFs (exchange-traded funds) fell sharply, and as of the close, game ETFs (159869), game animation ETFs (516770), and game ETFs (516010) all fell by more than 10%.
A number of companies have responded to the impact of the draft of the new regulations on online games.
Tencent told the Red Star Capital Bureau that since the release of the new regulations in 2021, Tencent has been strictly implementing the management requirements, and the game time and consumption data of minors are currently at the lowest level in history. The draft of the new management measures does not fundamentally change the key elements such as the reasonable business model and operation rhythm of games. The new version of the management measures released by the regulatory authorities this time clarifies the support attitude for the industry, especially in the encouragement of high-quality original games. Tencent Games will continue to adhere to the high-quality strategy of technological innovation and culture, and with the support of the competent authorities, it will practice the high-quality development of China's game industry.
According to The Paper, on December 22, XD Company (2400. HK) said it would actively cooperate with the implementation of the new regulations. At the same time, the company also said that its self-developed products have always adhered to the R&D orientation of differentiated high-quality products, and never relied on strong operational methods such as rebates for first charges and daily check-ins. The company will fully implement the spirit of the new regulations and specific measures to jointly promote the healthy development of the industry.
According to Yicai, the staff of Yao Ji Technology said that the company has just been informed of the new regulations on the management of online games, and if the draft is passed, it is estimated that the impact on the entire game sector and industry will be great. The staff also emphasized that the draft is for the industry as a whole, not for individual companies, and the company should study the details and then follow up on relevant countermeasures.
Fuchun shares (300299. SZ) said on the interactive platform that the implementation of the "Measures for the Administration of Online Games (Draft for Solicitation of Comments)" will have little impact on the company's existing operating game products. In 2022, overseas revenue accounted for 88.59% of the company's game revenue.
According to the Financial Associated Press, Shenzhou Taiyue (300002. SZ) said, "The impact on us is relatively small. Our game business is mainly overseas, and the overseas revenue of games in 2022 has exceeded 85%. At the same time, the policy level also continues to encourage culture and games to go overseas. In addition, the draft has just come out, and we need to study and Xi understand it in depth, and we will actively participate in the discussion of relevant opinions. ”
Regarding the impact of the draft on the online game industry, a practitioner in the game industry in Chengdu, Sichuan Province, told the Red Star Capital Bureau that the impact lies in the regulation of "setting limits on user recharge". He explained that the current online game only has a limit on the recharge of minors, which is in the range of several hundred yuan. If there is also a limit for adults, it will have a great impact on the game that relies on krypton players to survive in uniforms, and many small companies in the industry are in this model.
According to the Southern Metropolis Daily, Luo Peiyu, a game technology expert and author of "Unity3D Online Game Practice", said that as a game company, it must be consistent with the requirements of the state, and it is inevitable to abide by laws and regulations, and stricter regulations are conducive to the healthy development of the industry. "In the short term, it will have a certain impact on practitioners, and some games may need to modify some content to meet regulatory requirements, which will have an impact on the version planning and workload of games in the near future, and the numerical models of some games will also need to be adaptively adjusted. However, in the long run, all companies are competing on the same stage, and only companies that adapt to national policies can develop in the long term and occupy a place in the market. ”
Regarding the heated discussion caused by the draft for comments, insiders of the Game Working Committee of the China Audio and Digital Association told the surging news reporter that since it is a draft for comments, it shows that at this stage, all walks of life can speak freely to make it feasible and more perfect.
Red Star News reporter Cheng Luyang
Edited by Yu Dongmei Comprehensive report
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