China flip-flops on addictive gaming mechanic restrictions as stocks plumet and gamers celebrate

Late last week, news broke about new Chinese regulations that aimed to curb addictive and rewarding behaviours often used by gaming companies to bolster income and retain users. According to Reuters, the new regulations banned or heavily restricted excessive spending in online games, probability-based draws (like loot boxes), and daily login rewards.

Speaking to Reuters, Tencent Games's vice president claimed that the new rules would not meaningfully impact its operations or business model, which he called reasonable, contrary to the public perception of these particular gaming mechanics.

Despite Tencent Games's optimism about the new rules, the company's shares rapidly plummeted shortly after the announcement of the new rules, falling by as much as 16%. NetEase, another Chinese game company, saw a reduction in share prices of as much as 25%.

It is estimated that as much as $80 billion were wiped off of the gaming industry as a direct result of the announcements. Given the harsh impact the announcement has had on the global gaming industry, Chinese officials have reportedly commented that the government regulators were reconsidering the new rules.

Meanwhile, the public response to the initial announcement of stricter controls over the predatory gaming mechanics has been more positive. Gamers on both Reddit and X (formerly Twitter) both commented that systems like loot boxes and daily login rewards were unhealthy, especially in their current implementations, with some going so far as to say that these rules should be applied on a global scale.

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