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China’s gaming market was built on free and addictive games. Can Beijing stop kids from playing them?

September 3, 2021, 10:15 AM UTC

On Monday, China issued sweeping regulations giving children under the age of 18 a three-hour window to play video games per week. Now China’s youth will be allowed to play games only between 8 p.m. and 9 p.m. on Fridays, Saturdays, Sundays, and public holidays.

“Gaming addiction has affected studies and normal life…and many parents have become miserable,” the National Press and Publication Administration said in a statement. Earlier this month, a newspaper affiliated with China’s state-run newswire Xinhua blasted gaming companies for targeting young people, at one point describing online gaming as “spiritual opium.”

China’s new playtime rules amount to what may be the world’s most restrictive gaming policy for children. And yet the measures, however draconian, seek to address what China’s leaders perceive to be a genuine social problem: Chinese children log inordinately long hours playing online games.

China has over 720 million gamers, and roughly 110 million of them are under the age of 18, says Daniel Ahmad, a gaming analyst at Niko Partners. Ahmad says it’s difficult to pinpoint how many young Chinese gamers may be addicted to video games, but it is likely a substantial portion of gamers, given the proliferation of stories in Chinese media. Chinese state media report that 13.2% of China’s minors play games for over two hours a day on weekdays, amounting to tens of millions of children. A recent survey of 4,000 video gamers over the age of 18 in eight countries showed that Chinese gamers played more hours of video games per week than any other country. Chinese gamers played an average of 12.4 hours per week, exceeding the U.S. average of 7.7 hours per week and the global average of 8.5 hours per week, according to cloud services firm Limelight Networks.

The ubiquity and addictive nature of Chinese gaming is, at least in part, a function of the country’s own controls on the video game industry. A 15-year ban on gaming consoles focused game developers’ efforts on making highly engrossing games available to anyone with a smartphone. Indeed, the state helped support China’s smartphone-driven gaming industry in its quest to become the world’s largest gaming market.

Now Beijing seeks to sever the strong bond it helped forge between its youth and video games, and the only way to achieve that goal may be imposing intrusive ID checks and facial recognition technology to keep kids out of virtual worlds.

A mobile revolution

China banned the sale of video game consoles like Sony’s PlayStation and Microsoft’s Xbox from 2000 until 2015 due to fears that gaming would be a negative influence for children.

The ban coincided with a boom in smartphone use in China and the rise of Internet giants like Tencent and Alibaba. In 2010, 303 million people in China used mobile phones to surf the Internet compared to the 911 million people in China that have smartphones today.

Ahmad says that the smartphone-oriented nature of China’s gaming industry provided a relatively low bar to entry for gamers, increasing the popularity of online gaming.

“These games are extremely accessible through the mobile platform,” says Ahmad. “You can download them very easily, it doesn’t cost anything. Because these games got such a large reach, I think it’s increased concerns around addiction of minors for the government.”

In 2019, Colin Yao, the head of Tencent’s largest in-house developer, TiMi Studios, the maker of blockbuster hit Honor of Kings, told Fortune how in the early 2010s he designed games specifically for smartphones, tapping into Tencent’s widely used WeChat messaging app to make the game social in addition to making it appealing to smartphone users.

“Our players are looking for more casual gameplay and want more social and interactive elements in their games,” Yao said. “With the shorter attention spans, this means shorter games.”

The combination of making games shorter and initially free made the games widely popular and accessible. Meanwhile, encouraging spending to help players advance kept them invested and gaming companies profitable.

Ahmad notes that in developing games for smartphones and PCs, China’s gaming market was among the first to lean into free-to-play games as well as popular—and often vilified for being similar to gambling—practices like loot boxes. Loot boxes allow players in free games to buy a box of items that would provide boosts to gameplay without users knowing the value of the items in any given box.

“The games are designed to encourage people to spend on whether it’s in game boosters, or skins, or something that can help them win in terms of affecting gameplay,” says Ahmad, making the games highly “popular and addictive.”

Chinese developers kept users coming back by deploying a wide array of tactics to integrate social networks into games.

Tencent, for example, has leveraged the power of its social messaging app WeChat, which has over 1 billion active users in China, to boost the popularity of games and instantly connect users to fellow gamers.

“For adolescents in China, online gaming has become a centrally important sociocultural practice,” says Trent Bax, an associate professor of sociology at Ewha Women’s University who studies online gaming in China. “Not only do teens forge and maintain essential peer associations through online gaming, but gaming is also an important avenue through which they relieve stress.”

Regulation

China’s government has long vacillated between propping up gaming culture and cracking down on it.

After explosive growth in gaming in the early 2010s, in 2017 China’s largest state-owned newspaper, the People’s Daily, lashed out at gaming companies including Tencent for offering “poison” to Chinese society, arguing that the games had become too addictive and distorted Chinese values. That year the government rolled out restrictions on loot boxes, requiring companies to display odds of winning certain prizes of boxes gamers buy. In 2018, China issued a nine-month moratorium on licensing new games and cracked down on portrayals of violence in games.

In 2019, China introduced rules restricting citizens under the age of 18 to playing games for 1.5 hours per day on weekdays, three hours during weekends and holidays, and only during the daytime.

Despite the greater regulatory scrutiny, Chinese game developers boomed, thanks partly to government support.

China’s National Bureau of Statistics officially classified e-sports as a professional sport in 2019. The following year, municipal governments in Shanghai and Beijing announced subsidies and promotion campaigns to further develop e-sports in their cities. China’s state-run broadcaster ran a six-part documentary series on e-sports in 2020, while universities across the country have rolled out electives and majors related to online gaming.

2020 was the Chinese gaming industry’s most successful year to date, and the mobile gaming market grew to $29.2 billion in annual revenues, up 30.9% from the year earlier, according to Niko Partners.

Bax characterized China’s government approach to gaming as “ambivalent and contradictory.”

“On the one hand, the government has celebrated and promoted online gaming, e-sports, and techno-culture more generally as symbolizing China’s technological development and modernization,” says Bax. “On the other hand, the government has cultivated a social discourse of anti-gaming, with ‘Internet addicted’ teens stigmatized because they are said to threaten ‘social stability.’”

Facial checks

Some teenagers, at least, will likely be able to skirt the new gaming law.

“Actual gamers will find ways to get around the restrictions,” says Sebastian Francois, a veteran of China’s gaming industry. He explained that even with the restrictions, breaking gaming habits among China’s youth will be difficult, and China’s children have become increasingly adept at skirting previous restrictions through playing offline games, using virtual private networks (VPNs) to access foreign games, or logging in to games via their parents’ or grandparents’ accounts. “Kids will still be interested in [gaming] culture because it’s ubiquitous.”

Tencent, the world’s largest gaming company, has spent years attempting to get ahead of the regulations, using Honor of Kings as an experiment for how to check age requirements. In 2018, amid scrutiny from the government, Honor of Kings began piloting facial recognition checks after the company introduced rules banning children under 12 from playing the game for more than one hour a day. In July, Tencent rolled out the feature on over 60 games. Dubbed Midnight Patrol, the games tracked late night users and those with high spending habits and imposed a prompt to ensure that the users were not children playing on their parents’ phones.

“Facial recognition is actually Tencent going above and beyond what is required of them,” says Ahmad. “They have essentially tried to show that they are taking responsibility to clamp down on addiction.”

In a note to Fortune, a spokesperson for Tencent said facial recognition technology is only one part of a larger system that gives Tencent and parents of gamers tools to track and limit the playing time and spending habits of minors.

Chundi Zhang, a video games research analyst at Ampere Analysis, notes that Tencent’s measures have been effective, and that only 2.6% of Tencent’s gamers are under the age of 16 as of the second quarter of this year.

He says that Tencent’s face checks may also be providing a template for the wider gaming industry in how to enforce the three-hour gaming ban.

“The gaming industry needs time to adapt to the harsh rules, but face recognition may be introduced into more games in the long term,” says Zhang.

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