China is looking into strengthening restrictions against game publishers in the country, banning practices like daily logins and installing daily spending limits.

The country’s State Administration for Press and Publication (SAPP) issued today a circular seeking opinion on several changes to how games are published.

Some of the biggest changes would see the banning of Daily Login events in games distributed, a daily spending limit as well as see that all servers be stored in China.

The Daily login reward clause would also see the removal of step-up banners- basically a blanket ban on any practice that would encourage players to spend irresponsibly.

“Online games shall not set up induced rewards such as daily login, first-time recharge, and continuous recharge”, Article 18 reads. “Online game publishing and operating units shall not provide or condone high-priced trading behavior of virtual props in the form of speculation and auction.
All online games shall set a limit on user recharge and make it public in its service rules, and shall carry out pop-up window warning reminders for irrational consumption behavior of users”.

While not explicitly mentioning pay to earn game the limit on auctions would also effectively see the banning of any kind of NFT model either.

Since the proposed guidelines were revealed, the Chinese games market has been in chaos- shares in Tencent Holdings are down 13% as of this writing, with Reuters reporting that NetEase stocks are down as low as 25%.

Interestingly enough ByteDance seems to have avoided the worst of this- just a month before the proposed regulation the company had downsized its gaming sector.

A Smoother Application Process

The changes also do look to streamline the approval process- currently games seeking to be published in China require a publishing license, though the approval process was opaque in that there was no fixed schedule on when games would get their approvals.

Under the new proposed guidelines, the SAPP would return feedback within 60 days of the application- which in a vacuum could see more games published more regularly.

It also sees that the government would have to disclose the reasons for rejecting any applications. .

Additionally, the proposals would also see Chinese companies mandated to have their servers stored in China itself.

The proposed regulation change comes just after the Chinese market was set to return to form- following a long license freeze in the country that saw many studios shuttered, the industry was to be back on track with the approval of multiple titles, like HoYoverse’s Honkai Star Rail and upcoming Zenless Zone Zero.

However, sudden pivots to more controlled policy could reportedly hurt investor confidence, as Steven Leung, executive director of institutional sales at broker UOB Kay Hian in Hong Kong told Reuters:

“It’s not necessarily the regulation itself – it’s the policy risk that’s too high,” he said. “People had thought this kind of risk should have been over and had started to look at fundamentals again. It hurts confidence a lot.”