China Tightens Online Gaming Regulations

China's Ministry of Culture has issued what it calls the "Interim Measures for Internet Games" in an attempt to protect minors from "unwholesome" content.

The rules make up the first official document to deal with China's flourishing online gaming industry and will come into effect as of August 1, 2010. It will apply to social networking games as well as all domestic and imported massive multiplayer online role-playing games (MMORPG), which are wildly popular in China.

The measures were introduced after an unprecedented rise in the number of game players in April. The state administrator, China Internet Network Information Center (CNNIC) reported 105 million users of online games. As of August 1, all players must register with their real name and valid ID. Online game companies must also self-censor their content to bring it in line with the new regulations. Furthermore all imported games will be screened for suitability.

Some observers believe the new regulations are vulnerable to abuse. For instance, there is little to stop a minor using someone else's identity to register a new account. However, the MOC is aware of this and is considering using technology found in every internet café, such as webcams, for visual authentication.

The regulations point out the need to protect children from unsuitable material, officials said. There is also a total ban on minors handling virtual currency, used by many online games, particularly those created by Tencent, the company behind China's most popular instant messaging system, QQ. It is also a top game provider, and derives much of its revenue from selling virtual items as part of its games.

Virtual currency has been very big business in the past, with people spending more and more virtual currency (paid for with real cash) to get the latest and best virtual gaming equipment.

The new rules also try to ban obligatory hostilities between players set by the game administrators, which had been common practice to make the games more exciting. Also under the knife is pop-up advertising designed to entice netizens into playing the games.

At the same time, as regulations tighten in certain areas, they are loosening in others. Gaming licenses can now be obtained at the provincial level, rather than national level, for a maximum of three years. This "decentralization," together with a lower minimum registered capital, will lower the threshold to enter the market, which should be good news for small and mid-size businesses around the country. Previously they had needed permission from the Ministry of Culture in Beijing to enter the lucrative market.