Source: Zhongjin Dim Sum
Authors: Zhang Xueqing, Yu Xinyao, etc.
Zhongjin Research
On December 22, the State Administration of Press and Publication issued [1] the “Measures for the Administration of Online Games (Draft for Comments)” (later called the “Draft for Comments”), which elaborated on version numbers, content management, game consumption, etc. in online game publishing and operation, sparking a wide range of discussions in the capital market, industry, and public opinion. We believe that the draft opinion is intended to make up for the lack of management measures (previously the “Interim Measures” were abolished in 2019) and aims to promote the prosperity and healthy development of the industry; we judge that the “Opinion Draft” has not fundamentally changed the business model of the game industry after incorporating opinions from all parties, and suggests focusing on the industrial value of the high-quality development of “technology+culture” in the game industry.
summary
The Department of Public Administration issued a draft opinion on game management measures, emphasizing that the purpose is to ensure the healthy development of the industry, and that it will listen to the opinions of all parties to make revisions and improvements. The Press Office issued an “Opinion Draft” at noon on December 22. Among them, section 17/18 on “prohibiting forced matches” and “restricting excessive use of games and high spending” sparked market discussions. The next day, the relevant person in charge of the publication department made a public reply stressing that the “Opinion Draft” aims to promote the prosperity and healthy development of the game industry; the “Opinion Draft” is open for public consultation until January 22, 2024. During this period, the concerns and opinions of all parties will be carefully studied, and the “Opinion Draft” will be revised and improved.
Companies such as Tencent and NetEase have stated that they will actively research, give feedback, and implement, pointing out that the new regulations will not affect the current business model and will continue to implement the high-quality development path of the industry. After the “Opinion Draft” was published, game companies such as Tencent and NetEase all expressed their opinions one after another. We have sorted out the following main points: 1) The “Opinion Draft” does not fundamentally change the current game business model. Among them, Tencent pointed out that “there have been no essential changes to the game's business model, operating pace, etc.,” and NetEase also stated that “it will not have an essential impact on the business.” 2) All enterprises will actively participate in feedback and actively cooperate with the implementation of the new regulations. 3) All enterprises have always adhered to the protection of minors, high-quality cultural leadership, and technological innovation to promote enterprise progress and the healthy development of the industry.
The game industry leads the two-way integration of technology and culture, and promotes technological innovation and the dissemination of high-quality culture. We believe that games are a fusion of technology and culture, which is conducive to gathering technological and cultural resources, amplifying the core values of the industry, and promoting the common progress of society. 1) Technology: Gaming has become an important field for exploring innovative applications of science and technology and feeding back cross-industry development. It has contributed significantly and played a driving role in promoting the development of low-level communication facilities, promoting the upgrading and iteration of the chip industry, expanding AI applications, and promoting the progress of MR technology, unleashing strong digital productivity. 2) Culture: For China, companies such as Tencent, NetEase, and Mihayou continue to explore overseas routes, making games an effective vehicle for inheriting and promoting outstanding Chinese culture and telling Chinese stories to the outside world. In addition, game companies are also making full use of the cultural communication power and influence of game products to promote cooperation with industries such as cultural tourism consumption through “game +”.
risks
Macroeconomics affects consumer demand, industry policy changes, and technological development progress falls short of expectations.
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The background, timeline and current progress of the publication of the “Opinion Draft”. The Board emphasized focusing on the high-quality development of the industry
The “Opinion Draft” is intended to make up for the lack of industry management measures, and the detailed formulation of some regulations has sparked widespread discussion in the community. Sorting through the development and replacement process of key regulations and competent authorities in China's game industry, it can be seen that the previous version of the “Interim Measures” was abolished in 2019, and the new “Opinion Draft” issued by the State Press and Publication Administration at noon on December 22 is intended to make up for the lack of management measures. The “Opinion Draft” contains detailed statements on version numbers, content management, game consumption, etc. in the publishing and operation of online games (in particular, section 17/18 on “prohibiting forced battles” and “restricting excessive use of games and high consumption”), which sparked extensive discussions in the capital market, industry, and public opinion.
The Department of Public Administration promptly responded the next day, stressing that the aim is to ensure the healthy development of the industry, that it will listen to the opinions of all parties, make revisions and improvements, and send a friendly signal. The relevant person in charge of the State Press and Publication Administration stated the next day (December 23, Saturday) through the China Press, Publication, Radio and Television [2] that the draft solicitation of comments is based on safeguarding and promoting the prosperity and healthy development of the online game industry. The person in charge said that soliciting public comments on departmental regulations is a process of listening to opinions more widely and improving the rules and regulations. The State Press and Publication Administration will carefully study the concerns and opinions raised by various parties on Article 17, Article 18, and other elements of the draft for solicitation of comments, and will further revise and improve on the basis of continuing to listen to the opinions of relevant departments, enterprises, users, etc. According to the Department's official website announcement, the public consultation period for the “Draft Comments” ends on January 22, 2024.
We believe that after the “Opinion Draft” was published, the relevant person in charge of the publication department promptly replied and explained, indicating the purpose aimed at safeguarding and promoting the prosperity and healthy development of the online game industry. Focus on:
► The “Draft for Comments” is a process of publicly soliciting comments from the public to listen to opinions more widely and improve rules and regulations. Revisions and improvements will be made on the basis of careful research and continued listening to the opinions of relevant departments, game companies, users, etc.
► Combining the current state of healthy and stable development and regulation of the game industry, we believe that its original intention is to reflect the benefits of the good and the bad, ensure the high-quality development of the game industry, crack down on bad content, and at the same time set up corresponding rewards to support high-quality games and support high-quality game companies to go global, which is conducive to the long-term healthy development of the industry.
► The relevant person in charge of the Department of Publication specifically mentioned Article 17, Article 18, and other contents that are of concern to all parties.
► The Board's timely response to concerns about capital markets, industry and public opinion on the “Opinion Draft” was timely, and the regulatory attitude was slow, which helped ease the concerns and concerns of the capital market, enterprises and users, and gradually strengthened confidence and stabilized expectations.
Chart: Key regulations and changes in competent authorities in the domestic game industry: The old “Interim Measures” were abolished in 2019, and the new “Opinion Draft” is intended to make up for the lack of management measures
![资料来源:国家新闻出版署,文旅部,国务院办公厅,国家新闻出版广电总局办公厅,中金公司研究部](https://postimg.futunn.com/17034674394149209591792.png)
Game companies have stated that they will actively research, give feedback, and implement, pointing out that the new regulations will not affect the current business model
In response to this draft solicitation of comments, several game companies have responded in recent days, stating that they will carefully study, research, and actively follow up on feedback. Let's sort out the following key points:
► The “Opinion Draft” does not fundamentally change the current game business model. Among them, Tencent pointed out [3] that “the new “Draft for Solicitation of Comments” has not fundamentally changed the game's business model, operating pace, etc., and NetEase also stated [4] that “it will not have a substantial impact on the business.” Kaiying Network also stated [5] that “there is currently no substantial impact on the company's operations.”
► All enterprises will carefully study, actively participate in feedback, and actively cooperate with the implementation of the new regulations. Companies such as Tencent, NetEase, Perfect World, Kaiying Network, Xindong [6], and China Mobile Games have all indicated that they will actively participate in the process of soliciting comments and put forward specific and practical suggestions based on the current development needs of the industry and their own actual situation. Perfect World also pointed out that through close communication between the industry and authorities, it is hoped that all sectors will promote “consensus” and promote the high-quality development of the industry.
► All enterprises have always adhered to the protection of minors, high-quality cultural leadership, and technological innovation paths to promote enterprise progress and the healthy and orderly development of the industry. In its response, Tencent stressed that since the new “Protection of Minors” regulations were released in 2021, it has strictly implemented management requirements. Currently, minors' gaming hours and consumption data are at historic lows; they will continue to adhere to a quality strategy led by technological innovation and culture. NetEase also said that NetEase Gaming has always strictly implemented various rules, regulations and requirements such as preventing addiction among minors. Xindong, on the other hand, pointed out that “its self-developed products have always adhered to the direction of differentiated quality research and development.”
Chart: Game companies' official responses to the “Online Game Management Measures (Draft for Comments)” issued by the State Administration of Press and Publication on December 22
![资料来源:新京报贝壳财经[7],科创板日报[8],财联社[9],第一财经[10],互动易[11],证券时报[12],中国](https://postimg.futunn.com/1703467439450774442800.png)
Game companies continue to implement a high-quality, healthy and orderly development path and implement social responsibility
The level of implementation of game corporate social responsibility continues to improve. According to Gamma data, the social responsibility index of China's game industry reached 13.9 in 2022, achieving 4 consecutive years of growth. Balance and in-depth development in various dimensions are the main factors in the index's growth. Gamma Data's “2022 China Gaming Corporate Social Responsibility Report” points out that some segments are prominent, including: 1) remarkable results in the protection of minors and a record low level of reporting on negative incidents; 2) a persistent layout of different social responsibility fields, and high results. At the product level, it has also been observed that game companies continue to launch games with social influence and a sense of responsibility, including “Star Life Park” (to help children with autism) for 37 mutual entertainment, and Kaiying Network's “Baigong Ling” and “Age Season” IP (spreading traditional Chinese culture).
Chart: China's game corporate social responsibility index continues to rise, achieving 4 consecutive years of growth from 2018 to 2022
![注:伽马数据《2022中国游戏企业社会责任报告》更新于2023年1月 资料来源:伽马数据,中金公司研究部](https://postimg.futunn.com/17034674393902087264182.png)
Chart: The four dimensions that make up the Industrial Index in 2022 all made positive contributions. Among them, the three-dimensional contributions of social services, influence, and regulation are even more obvious
![资料来源:伽马数据,中金公司研究部](https://postimg.futunn.com/17034674394004853356326.png)
Note: The contribution of each dimension to growth = the increase in the score of this dimension ÷ the total increase in the social responsibility index of the Chinese game industry. The social value and social service dimensions focus on the positive benefits of the game industry to society. Among them, social services focus more on society's basic requirements for the game industry, while social value favors additional contributions. Social impact and social supervision focus on considering each entity's intuitive impression of the game industry, and dividing it into different dimensions based on factors such as the subjects involved and the nature of the incident
Chart: Some examples of game enterprise social responsibility implementation in recent years: expansion and implementation in the direction of technological innovation and empowerment, education and public welfare, and rural industry revitalization
![资料来源:伽马数据,公司公告,中金公司研究部](https://postimg.futunn.com/17034674394751433458216.png)
Chart: The domestic game industry has now established a relatively complete and comprehensive system for the protection of minors
![资料来源:伽马数据,中金公司研究部](https://postimg.futunn.com/17034674394073016818756.png)
Chart: Measures and results of some domestic game companies to prevent underage addiction
![资料来源:伽马数据,中金公司研究部](https://postimg.futunn.com/17034674394976983060255.png)
The game industry leads the two-way integration of technology and culture, promotes technological innovation and high-quality cultural dissemination, and has positive development significance
We believe that games are a fusion of technology and culture, which is conducive to gathering technological and cultural resources, amplifying the core values of the industry, and promoting the common progress of society.
Resonate and dance with science and technology to promote technological innovation and application. Gaming has become an important field for exploring innovative applications of science and technology and feeding back cross-industry development. It has contributed significantly and played a driving role in promoting the development of low-level communication facilities, promoting the upgrading and iteration of the chip industry, expanding AI applications, and promoting the progress of MR technology, unleashing strong digital productivity.
Chart: Games promote technological progress and applications in various fields such as hardware, communications, software and computing, virtual reality, and artificial intelligence
![资料来源:公司公告,《计算机驱动世界——新编现代计算机发展史》(Thomas Haigh,Paul Ceruzzi;2022年12](https://postimg.futunn.com/17034674394881218058449.png)
Games help culture sail overseas and interact together across industries. As far as China is concerned, companies such as Tencent, NetEase, and Mihayou continue to explore overseas routes, making games an effective vehicle for inheriting and promoting outstanding Chinese culture and telling Chinese stories to the outside world. In addition, game companies are also making full use of the cultural communication power and influence of game products to promote cooperation with industries such as cultural tourism consumption through “game +”.
Chart: The scale of overseas revenue from games developed by China grew rapidly from 2013 to 2021, reaching US$16.4 billion in 2023
![资料来源:伽马数据,中国音数协游戏工委,中金公司研究部](https://postimg.futunn.com/17034674394879443948795.png)
Chart: Distribution of China's self-developed game overseas revenue in 2023 (by country): The US, Japan, and South Korea are the top three overseas countries, and have achieved revenue in many countries around the world
![资料来源:伽马数据,中国音数协游戏工委,中金公司研究部](https://postimg.futunn.com/17034674394307804409143.png)
Chart: Game technology helps promote traditional Chinese culture, inherit intangible heritage culture, and use overseas as a carrier to drive Chinese culture to “go global”
![资料来源:游戏工委,网易游戏社会责任促进中心,腾讯互动娱乐,三七互娱《2023年半年度社会责任报告》](https://postimg.futunn.com/17034674396582854651534.png)
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[2] https://www.chinaxwcb.com/2023/12/23/99835425.html
[3] https://www.bkeconomy.com/detail-1703235883129735.html
[4] https://m.gelonghui.com/live/1346589
[5] https://m.yicai.com/news/101935503.html
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[7] https://www.bkeconomy.com/detail-1703235883129735.html
[8] https://www.chinastarmarket.cn/detail/1552406
[9] https://www.cls.cn/detail/1551590
[10] https://www.yicai.com/news/101935760.html
[11] https://irm.cninfo.com.cn/ircs/question/questionDetail?questionId=1619125200200671232
[12] https://www.stcn.com/article/detail/1073131.html
[13] https://www.chinaxwcb.com/2023/12/23/99835425.html
Editor/jayden