Can strict regulations save Chinese youths from gaming addiction?
On 3 August, Economic Information Daily ran a lengthy article titled "'Spiritual Opium' - Online Gaming an Industry Worth Hundreds of Billions", harshly criticising online gaming as "spiritual opium", sparking speculation that following a regulatory clampdown on tuition centres, the trillion-dollar online gaming industry might be the next target.
The article named the game Honor of Kings by China's largest online gaming company Tencent, prompting speculation that the article was targeted at Tencent. Economic Information Daily is an economic publication under Xinhua, and one of the media channels for information dissemination. Very likely, this article precedes further action by the authorities.
The essay was harshly critical of the widespread online gaming addiction among adults and the inestimable impact of online gaming on the healthy development of minors. It said that online gaming addiction was detrimental to the biology and psychology of China's minors, and that the damage caused by gaming was becoming common knowledge, with frequent reference to it as "spiritual opium" and "electronic drugs". The article named Tencent Games as accounting for over half of the industry, and Honor of Kings as the most popular online game among students.
The article also quoted an expert saying that gaming platforms cannot grow at the cost of "destroying" a generation, and there should be greater social responsibility rather than purely chasing profits. The expert also called for greater monitoring and penalties, and felt that gaming companies should protect minors by improving anti-addiction systems and better regulating platform content for minors.
Drop in share prices of Tencent and others; article mysteriously removed then restored
That article set off waves in the market, with share prices of Tencent and its competitors taking a heavy hit. Amid trading in Hong Kong, Tencent's shares fell by over 10% at one point, losing over HK$400 billion. Shares of Hong Kong-listed NetEase dropped by 15% at one point, while shares of video sharing and e-gaming group Bilibili saw a fall of 14%.
Strangely enough, after the article was published in the morning it immediately went viral - but was also very quickly removed from websites and WeChat, while remaining available on Xinhua and other news websites. WeChat user @zmtg11080 (传媒江湖荟) said the article was only live for four hours, and the account history showed that the article was deleted by the original poster, with no explanation as to why it was deleted.
After the article was removed, Tencent's share prices immediately rebounded.
According to reports, there was another twist that came in the evening. Economic Information Daily restored the deleted article, with the title changed to "Online Gaming an Industry Worth Billions". There was no mention of opium or electronic drugs, nor did those terms appear in articles on the Xinhua website. However, the original article was retained on other news websites in China.
How addicted are China's netizen minors to online gaming? According to reports, 62.5% of netizen minors frequently play online games, while 13.2% of mobile phone users who are minors spend a daily average of over two hours on mobile games on a school day.
Tencent quickly announces curbs
With this sudden media onslaught, Tencent quickly released a statement that it will introduce new measures for its online games, starting with Honor of Kings. These measures include implementing time restrictions on minors - gaming time will be tightened from 90 minutes to 60 minutes during non-holidays, and from three hours to two hours during holidays; prohibiting players under the age of 12 ("primary school students") from spending money in the game; curbing users logging on with gaming accelerators; and clamping down on the trading of adult accounts on third-party platforms.
How addicted are China's netizen minors to online gaming? According to reports, 62.5% of netizen minors frequently play online games, while 13.2% of mobile phone users who are minors spend a daily average of over two hours on mobile games on a school day.
Massive support from netizens contributed significant income to Tencent.
Last year, Tencent's income from online gaming hit 156.1 billion RMB (about S$32.6 billion), accounting for over half of the real income of China's gaming industry. This was 101.5 billion RMB more than second-ranked NetEase, accounting for nearly one-third of Tencent's income for the year. Honor of Kings topped the global online games best-seller list for the second year in a row.
In recent months, the Chinese authorities have stepped up monitoring of large technology companies in areas such as data security, monopolistic behaviour, and financial stability. Tencent has felt the effects of this. Last month, Tencent announced a suspension of new user registrations on WeChat, which prompted speculations of it facing a fresh round of regulatory impact. If online gaming becomes the next target of scrutiny by regulatory agencies, Tencent will probably come under greater pressure.
Online games to have the same fate as off-campus tuition centres?
Chinese President Xi Jinping commented on "chaotic" off-campus tutoring during a meeting with national political advisers from the education, medical and health sectors on 6 March during the Two Sessions (lianghui).
Four months later, China officially released the "double reduction" policy on 24 July, putting into place strict measures targeting off-campus tutoring.
...some parents have even questioned why gaming platforms are allowed to provide gaming services to underage students following the suspension of tuition classes on weekends, public holidays, and winter and summer vacations - surely it is not to allow students to play games all day?
On the same occasion in March, Xi also raised the issue of online game addiction, stating that this is a "social problem" that requires the joint efforts of all sectors of society and various relevant departments to analyse and solve together.
Some analysts thus believe that going by the above chain of events, online games may end up with the same fate as off-campus tuition centres and come under even harsher regulation.
The risk of excessive influx of capital into people's lives
Xiong Bingqi, director of the 21st Century Education Research Institute, also said in his article that the gaming industry will inevitably go the way of off-campus tuition centres. He said that some parents have even questioned why gaming platforms are allowed to provide gaming services to underage students following the suspension of tuition classes on weekends, public holidays, and winter and summer vacations - surely it is not to allow students to play games all day?
From the perspective of China's future development, Xiong thinks that the gaming industry should come under even harsher regulations than the education and training industry to some extent.
Reuters reported that if minors now spent the time they would have spent at tuition centres on gaming, the significance of the "double reduction" policy would be greatly reduced.
It added that online games have become a major headache for Chinese parents over the past decade, and tragedies resulting from teenagers' overindulgence in online games are a dime a dozen. Quoting experts from the education industry, the report said it was common for children to use their smarts to use their mobile phones in secret. Not only that, given the addictive nature of online games, kids are resorting to using their parents' credit cards without permission or borrowing money to spend on their games.
Taking the off-campus tutoring industry as an example, the report also mentioned that Chinese regulators are already zeroing in on the risk of an excessive influx of capital into people's lives. Quoting a netizen, "Online gaming is already labelled as 'spiritual opium'. Can a prohibition of its consumption be far away?"
State media articles not always an accurate reflection of the official position?
However, Hong Kong's South China Morning Post published an article saying that the Economic Information Daily article may not necessarily be reflecting the authorities' official position. Furthermore, the scope of Economic Information Daily's investigative reports has always been broad, ranging from stories on congested waterways to packaging wastage. It in fact hardly covers technology news.
The article also noted a difference in tone between the report and that of Yang Fang, vice-director of the Publishing Bureau of the Central Publicity Department, in his speech last week.
At the China Digital Entertainment Expo and Conference (ChinaJoy) held in Shanghai on 29 July, Yang urged gaming companies to inject the Chinese spirit into Chinese games and create more cultural symbols with greater influence. This was so that the Chinese story and culture could reach an international audience and touch people's hearts through technology and creativity.
Yang remarked that online games are a combination of light, sound, electronics and the arts, and incorporate various artistic elements such as music, art and literature. "Many people call online games the 'ninth form of art'," he noted.
But to the Economic Information Daily, this "ninth form of art" suddenly became "spiritual opium", which led the South China Morning Post to say that the article might not reflect the authorities' official position.
However, on the same occasion, Yang also talked about the management of online games. He reminded the industry to ensure that the content in online games was suitable for its audience and to do everything possible to prevent game addiction. Various regulatory measures should also be implemented thoroughly so as to protect the mental health of young people. He stressed that this was the most urgent and important safety requirement at present.
Besides, Tencent's games occupy a significant share in the global gaming market and Honor of Kings is reported to have 100 million daily users worldwide. With online games being regarded as one of China's important cultural exports, online games will not be completely shut out.
No intention to eradicate the gaming industry
Actually, regulatory controversies surrounding Tencent's online games are not new. In 2017, the People's Daily published two articles labelling Honor of Kings as "poison" and a "drug" that harms teenagers. It called for the regulation of such "social games". When China stopped granting licenses for online games for a time in 2018, Tencent lost over US$1 billion in sales and the company's stock price plunged.
In sum, it will be hard for the online gaming industry to escape the fate of "rectification" this time round. But the new regulations will mainly focus on ensuring that minors do not fall prey to game addiction, instead of eradicating the entire gaming industry because people still need games to spice up their lives.
In the words of a netizen, "Games are a new form of entertainment in this era, and entertainment is also a way to relieve stress." It may be an exaggeration and inappropriate to label games as "spiritual opium", but it is not good to overindulge in them as well.
Besides, Tencent's games occupy a significant share in the global gaming market and Honor of Kings is reported to have 100 million daily users worldwide. With online games being regarded as one of China's important cultural exports, online games will not be completely shut out. Thus, the key lies in controlling the level of supervision over this realm.