On December 22, 2023, the news came from China that the authorities were again taking action against gaming: The ways in which games earn money have been restricted. This led to a sharp drop in stock prices for the company behind League of Legends, Tencent, and NetEase. Apparently, this now has consequences. You should better not confront the powerful penguin and LoL.
What were these restrictions? We reported on MeinMMO at Christmas that the Chinese authorities imposed new restrictions on video games on December 22:
- Online games were no longer allowed to reward players for logging in daily
- Games could no longer reward players for spending money for the first time
- Furthermore, it was prohibited to reward players for logging into the game on consecutive days
The rules were apparently aimed at reducing the “addiction factor” associated with free-to-play games. Because these are all typical methods used by free-to-play games to keep players engaged and spend money in the cash shop.
League of Legends is a gaming giant, ultimately backed by Tencent Games:
Gaming giant collapses on the stock market
This was the consequence: The news of the restrictions triggered a stock market crash among major Chinese gaming companies. Especially Tencent (the company behind LoL, the emblematic penguin) suffered significantly, losing 16% of its stock value at the lowest point. That’s quickly gone 50, 60 billion $ at a market cap of 400 billion $.
According to experts, the stock market crash was not due to the specific impacts of the new rules, but rather because a signal was sent: “The Communist Party has once again identified video games as a problem.”
This has happened before: The party labeled gaming as “digital opium” and for a long time, no new games were allowed: There was a “freeze.” In China, games need an official license to even be released.
China quickly backtracks after stock market crash
This is what happened next: Just a few days later, on December 25, China hinted that it did not want to send the signal that it was opposed to video games and quickly approved 105 new games to make it clear that it was not planning a “new strike against games.” (via gameworldobserver).
The face behind the strict rules against games must go
But apparently that was not enough. As reported by the news agency Reuters, the responsible official Feng Shixin has now been dismissed. He was the head of the “Publishing Unit” of the PR department of the communist party. His department also oversaw a National Agency that establishes the rules for video games.
According to 5 sources from Reuters, his dismissal is directly related to the new rules for video games and the stock market crash.
No official statement has been made, but Feng was seen as the face of the Chinese government for the “rules against video games.” Observers now interpret this as a signal that China is shifting towards a more “pro video game industry” stance.
The penguin will be happy. However, Tencent’s stock has not yet significantly recovered from the pre-Christmas slump: Former partner of Blizzard and parent company of LoL loses 80 billion $ because China enacts new rules for games
