The CCP softens its stance on live service games after plummeting stocks, reportedly removes official responsible for the panic

The Chinese Communist Party—who had taken aim at free-to-play monetisation schemes just before the holidays—softened its stance. This was after “nearly $80 billion in market value” bled from Tencent (League of Legends) and NetEase (Diablo: Immortal). 

The draft rules intended to target the live service giant’s favourite toys (such as daily login bonuses) while also threatening a core species of player—the deep-pocketed ‘whale’—completely extinct, with harsh spending limits. While I’m sure us players are tired of these systems, they aren’t so easily toppled. The market panic was inevitable, in hindsight.

Despite analyst’s insistence that the draft rules wouldn’t be changed, adjustments were announced later in the month, according to a report from Reuters: “China’s video game regulator—the National Press and Publication Administration—has struck a more conciliatory tone, saying it would improve the rules by ‘earnestly studying’ public views.”

The report goes on to state that shares in Tencent proceeded to climb 5% (after a 12% dip), while NetEase’s shares rose 10% (after a 25% fall) after morning trades on Wednesday December 24. There are also reports that NetEase is in talks with Blizzard again—that’s after a spat saw the company dramatically smashing up a statue of Gorehowl early 2023. Maybe because it literally destroyed its axe to grind, who knows.

Furthermore, the CCP has also reportedly removed an official by the name of Feng Shixin, according to a Reuters follow-up. Shixin was head of the Communist Party’s Publicity Department, which oversees the country’s gaming industry via the National Press and Publication Administration (NPPA). 

The report cites five sources which all believe Shixin’s removal were related to the draft regulations and the disastrous stock plummets that followed—though it also states they “declined to be identified as authorities had yet to officially announce Feng’s departure”. Shixin has led the charge on similar regulations before, representing the (NPPA) at several events related to the government’s handling of its gaming industry.

Speaking with Bloomberg, a market strategist from Hong Kong’s Saxo Capital Markets said the official’s removal would help ease investor scepticism: “If the story is accurate, it will send a signal that what happened was not a reversal of policy direction … but overall, investors are still sceptical. The news is positive but is not big enough to move the needle.”

It’s noteworthy that the market response was so dramatic, seemingly causing the CPP to think twice. Especially since the digital curfews for gaming youngsters employed in 2021 were severe—even using facial recognition tech to enforce them.

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