Chinese regulators are set to roll out new laws that could have a significant impact on games that rely on gacha mechanics, including global hits Genshin Impact, Honkai Star Rail, and Pokemon Unite.
China has many restrictions on video games within its borders including how often games can be played, how they’re monetized, and what the games can be about. These rules are often closely intertwined with the country’s harsh censorship laws, and studios both in and out of China have seen the rugs pulled out from under them due to the implementation of new rules.
A new set of regulations is seeking to end a long list of mechanics that are staples of live-service games. These rules will impact a long list of games, with China-made games like Genshin Impact, Honkai Star Rail, and Pokemon Unite getting forced to change their monetization models and rewards systems.
What are China’s new rules on mobile games?
China is positioned to implement new rules and adjusting existing rules that would ban many of the practices of live-service and mobile games that encourage players to regularly play or spend money.
The rules seek to ban a number of different practices including:
- Daily log-in rewards
- Discounts, bonuses, or rewards for spending money in the game for the first time
- Additional incentives for a player making large or repeated real-life currency transactions
- Loot boxes or any chance-based rewards being offered to minors
These rules have not gone into effect, and are open to debate through January 22, 2024. The proposed regulations could be adjusted.
Alongside these potential bans are limitations on how much real-life currency can be transferred to in-game digital wallets, regardless of player age. There is also a new requirement to store all user data on servers within China’s borders. Finally, there are also rules against artificial “streamer luck” where entities selectively change the odds on randomized mechanics for content creators, creating an inaccurate impression about the rates of valuable pulls.
These proposed laws appear to be a direct response to certain incentivized systems in free-to-play online games like Genshin Impact, which regularly rolls out new characters and incentivizes players to continue returning to the game and keep spending money. These systems have often been labeled as predatory, with scientific studies suggesting these mechanics are particularly dangerous for children.
These rules could have a drastic impact on player counts and are seemingly designed to reduce in-app spending of real-world currency, which is the bread and butter of F2P game revenue streams.
Genshin Impact, Pokemon Unite, and many others impacted by proposed laws in China
HoYoverse games, which include Genshin Impact, Honkai Star Rail, and the upcoming Zenless Zone Zero make use of these mechanisms in some way, shape, or form. Other major mobile games such as Pokemon Unite do the same, with daily rewards and missions, discounts on currency purchases, and multiple gacha mechanics.
If these regulations are implemented, they will likely compel developers to rethink certain game design philosophies. It’s unknown whether these systems can be implemented outside China. The Chinese versions of these games could be adjusted to conform to these rules while leaving the international releases as-is. Other games of this nature developed outside China, like Israel-made Raid: Shadow Legends, will be unaffected outside of the Chinese market.
This isn’t the first time Chinese authorities have cracked down on the native gaming industry. In 2021, restrictions were placed on the gaming activities of players under the age of 18 to rein in potentially addictive behaviors associated with gaming. The approvals process for new games, which is mandatory in China, was put on the backburner as well.
The Chinese game market saw a 13% rise in revenue after these restrictions were lifted, per Reuters. The effects of this latest announcement were immediately felt in the stock markets, with Chinese gaming conglomerates Tencent Holdings and NetEase taking heavy losses.
On the plus side, there is an included proposal that would see regulators process the approval for new video games within 60 days. These remain draft regulations and are open to public scrutiny and comment until January 22, 2024.
