Children Will Not Be Allowed To Spend More Than Three Hours Per Week Playing Online Games In China, According To The Government

Children will not be allowed to spend more than three hours per week playing online games in China, according to the government

According to new rules published Monday by China's National Press and Publication Administration, children and teenagers under the age of 18 will be permitted to play online video games for a total of no more than three hours per week.

The decision is yet another setback for China's gaming behemoths, which include companies such as Tencent and NetEase, which have been subjected to a barrage of regulations this year in areas ranging from antitrust to data protection. This has alarmed investors and resulted in a depreciation of Chinese technology-related stocks.

Individuals under the age of 18 will be permitted to play video games for one hour per day between the hours of 8 p.m. and 9 p.m. on weekends and legal holidays, according to a translated notice announcing the new rules, according to the notice. The agency argued that the rules were necessary to protect the physical and mental health of children in the community.

Those who operate businesses that provide online gaming services to minors will be subject to the rules, which will restrict their ability to serve those users outside of specific hours. Users who have not logged in using their real names will also be barred from using the services of the companies, preventing them from remaining ignorant of their customers' backgrounds.

The National Parental Participation Act's most recent rules significantly restrict the amount of time minors can spend playing online games. Individuals under the age of 18 were permitted to play video games for a total of 112 hours per day on most days in accordance with the 2019 rules.

Over 110 million minors play video games in China today

“There are over 110 million minors who play video games in China today, and we anticipate that the new restrictions will result in a decrease in the number of players as well as a decrease in the amount of time and money spent on games by those under the age of 18,” said Daniel Ahmad, a senior analyst at Niko Partners.

We do not expect the decrease in spend to have a significant impact on the bottom lines of game companies, given that time and spending restrictions on minors have already been in effect for two years. Consequently, we expect a milder impact on overall growth rates, given that minors' spending was already at a low level.”

Previous statements by Tencent have indicated that younger players account for a small portion of the company's overall gaming revenue in China. China's gross game revenue was 2.6 percent higher in the second quarter of the year due to the presence of players under the age of 16.

One of China's gaming behemoths, Netease, saw its stock price fall by 4% on Monday, according to data from the New York Stock Exchange.

A statement from Tencent stated that it will comply with the new requirements and that it supports the new regulations. In recent months, the Chinese gaming behemoth has taken steps to get around regulatory oversight. Players were required to perform a facial recognition scan on their phone to verify their age when Tencent implemented a requirement for them in July.

CNBC reached out to NetEase for comment, but did not receive a response right away.

In Conclusion

Beijing has long been concerned about the prevalence of gaming addiction among the country's children and teenagers. Until 2014, gaming consoles were prohibited in the United States for approximately 14 years. Another article published this month in a state-affiliated publication described online gaming as "opium" and called for additional restrictions. Following its removal, the article was later republished with a new headline and no mention of the word "opium." Investors, on the other hand, are concerned about the possibility of additional gaming restrictions being implemented.

In a statement issued this month, Tencent stated that it expected additional regulation but that it was confident in its ability to comply.