The Weekly Raid: Will The Gaming Industry Finally Face Regulation?
It has been a bruising month for Chinese gaming hegemon Tencent. First, their US based subsidiary Riot Games was accused of sexism which required major readjustments at the studio. These culture problems also brought to light Riot's declining profitability, with the company on course to run a deficit unless something changes soon.
Closer to home, Tencent found itself on the wrong side of the ruling Communist Party's favor and had its license for Monster Hunter Worlds abruptly revoked. This forced Tencent to issue millions in refunds and left many gamers angered and confused. Worse still, the Chinese government followed up with a freeze on all new game licenses. That caught the entire industry off guard, but hit Tencent especially hard as the Chinese version of Fortnite was just getting ready to leave closed beta and officially launch.
Reeling from these blows, Tencent responded by trying to be proactive in the face of new regulations that are undoubtedly on their way. The company shuttered its Texas Hold'em app, and now requires all new users for its hit mobile MOBA Honor of Kings (aka Arena of Valor) to link their real names, verified via an official government database, to their accounts.
Its clear the Chinese government is readying for further gaming regulation, largely to combat the health effects of excessive gaming. Internet addiction is a growing concern around the world, but is especially prevalent in East Asian countries including China and Korea. The Korean government has long required verification of gaming accounts via official national ID numbers.
While Tencent has been at the vanguard of the regulatory bruising, Western studios face their own challenges. This week Belgium threatened to press criminal charges against Electronic Arts for continuing to sell loot boxes in FIFA 18 despite a ruling earlier this year that such loot boxes were an unlicensed form of gambling. Other studios, including Valve and Blizzard, promptly complied by removing lootboxes for Belgian users in hit titles like Overwatch and CS:GO. IF EA doesn't blink and this case ends up at a higher EU court, it could unleash a wave of regulatory changes across the Western world that either cement the status of loot boxes in video games, or see them removed entirely.
Whether its by government decree as in China or through court cases in the West, it seems we're at the cusp of a new wave of regulatory challenges for the gaming industry. Are such regulations long over do, or will global governments end up hampering what is now the fastest growing segment of the wider entertainment industry?