Beyond Gaming: Assessing the Ripple Effect of China's Regulatory Actions on BABA and JD

The Chinese authorities have recently issued a comprehensive draft of rules and regulations to reduce online expenditure and in-game rewards in video games. These impending regulations would prohibit online games from offering incentives to players based on their consecutive logins, first-time purchases, or recurring payments – standard practices typically deployed in online gaming scenarios. The […] December 27, 2023 [Option Sensei] [Beyond Gaming: Assessing the Ripple Effect of China's Regulatory Actions on BABA and JD]( The Chinese authorities have recently issued a comprehensive draft of rules and regulations to reduce online expenditure and in-game rewards in video games. These impending regulations would prohibit online games from offering incentives to players based on their consecutive logins, first-time purchases, or recurring payments – standard practices typically deployed in online gaming scenarios. The removal of the incentives could reduce daily active users and in-app revenue. Such a change could ultimately compel publishers to restructure their game design and monetization strategies. The draft represents the most stringent enforcement to date. It bars games from presenting probability-based draws to underage users and disallows the trading of virtual gaming items. Amid ongoing concerns over user data security, it mandates that game publishers host their servers domestically in China. The aggressive regulations have slammed the world’s largest gaming market. The immediate fallout saw investors retreating in haste, resulting in an[ approximate loss of $80 billion in market]( value for China’s two dominant gaming companies, Tencent Holdings and Netease. Several U.S. and European video game developers saw shares take a hit after Friday’s announcement, but the losses were small when compared with Tencent’s 16% tumble and NetEase’s 25% decline. The regulation news[ wiped about $54 billion off Tencent’s share value](. The country initiated its major[ clampdown on the gaming sector in 2021]( implementing stringent playtime restrictions for minors and freezing new game approvals for almost eight months, citing increasing concerns over gaming addiction. These regulatory measures led to unprecedented challenges for China’s gaming industry in 2021 and 2022, marking the first time the industry witnessed a contraction in total revenues. While the Chinese authorities resumed approval of new games in the following year, regulators have maintained their focus on managing the duration of gameplay for minors and their overall expenditure within the game. The recent draft comes as[ China’s domestic game market revenue]( reached Â¥303 billion ($42.6 billion), growing 14% in 2023, reversing a 10% decline from the year before, as per figures from industry association CGIGC. Due to the sheer size and impact of Chinese gaming giants, the global video games market could also be affected in the long run. The profound impact of China’s recent regulations has… Continue reading at [INO.com]( NOTE: If URLs do not appear as live links in your e-mail program, please cut and paste the full URL into the location or address field of your browser. [Privacy Policy]( | [Terms & Conditions]( This is a paid advertisement.This is not a solicitation for the purchase or sale of securities. Readers are encouraged to conduct their own research and due diligence, and/or obtain professional advice, prior to making any investment decision. Advertisements and sponsorships are provided as a service to Wealthpop users. Wealthpop is not responsible for their content, services or products. The statements and opinions contained in this advertisement are not those of Wealthpop, and Wealthpop disclaims any liability for or arising from such statements and opinions. You are hereby advised that Wealthpop is receiving a fee as compensation for the distribution of this advertisement. [Click here to unsubscribe]( Copyright © 2023 Wealthpop. All rights reserved. Magnifi Communities, 1 Penn Plaza, Suite 3910, New York, NY 10019