Chinese Clampdown on Video Games Bears Lessons for India

As the Union’s big and autocratic neighbor ramps up restrictions on online gaming, more questions are raised than solutions are found. The fight on problem gaming remains a challenge in China but game developers and investors start abandoning the once fertile tech startup ecosystem.

Heavy Handed Approach Brings Uncertainty for Consumers and Businesses Alike

Over the past few months China has placed increasing restrictions on several digital industry segments. High profile tech startups that had enjoyed their success story in the vast and competitive Chinese market have now seen opportunities vanish as the most active age cohort – adolescents – have been practically banned from playing online and mobile games.

Media outlets report frequently on the effects that these bans have on the gaming industry. Restricting the total amount of hours that minors can play to 3, over the weekend, has been defended by Chinese authorities as fighting the “opium of the mind” and protecting the youth. However, users still find ways around the ban, with VPNs and full-access accounts a hot commodity in online forums.

China’s answer is, again, to put more pressure on companies by requiring them to implement facial verification and other advanced algorithms to verify minors don’t access online gaming outside the hours 8 to 9 pm on Friday, Saturday and Sunday. This, however, means more investment and resources on behalf of game developers and a smaller consumer base, making the market increasingly unsustainable for most. The developers of the global hit game Fortnite are among those cited as leaving China, for the time being at least.

By contrast, for those wishing to play casino, casual mobile games or online roulette India has taken a different approach. The distinction between skill and chance remains decisive on a Central level, while States decide on their own whether and how to regulate online gaming for money.

While many in the gaming industry support the view that a unified approach will help the sector stand out, one thing has become clear – blanket bans don’t work. Several states have tried to outlaw online games for stakes but such decrees have been repeatedly declared unconstitutional by High Courts and proven ineffective by markets.

Crucially, consequences on desi tech companies and gaming developers have been similar to those seen in China. Local players have often turned to offshore platforms while investments and employment opportunities have been adversely affected across those states.

Demanding Regulation Better than Blanket Bans

Profound industry studies have shown that national-level requirements and tight State regulations are always a preferable option to a blanket prohibition. Setting up a Central licensing system enables higher levels of consumer protection, helps fight problem gambling and provides abundant funding for welfare programs and community projects.

Gaming businesses tend to agree that compliance challenges lead to higher standards. These regard anything from payment safety to advertisement codes, responsible gaming tools, taxation and anti-money laundering transparency, even extending to sports integrity and reporting mechanisms.

Failing to provide such safety nets exposes both companies and consumers to a range of negative economic and social factors, including illegal competition and rash decisions from local authorities.