This is the sixth edition of our legal primer on the regulation of China’s digital game industry. This edition, like its predecessors, provides an overview of the relevant laws and regulations, as well as actual industry practice in the People’s Republic of China (the “PRC” or “China”). In doing so we draw upon not only the written rules, but also informal comments from regulators and other industry participants, in addition to the many years of experience that our attorneys have advising clients in China’s digital game industry.
This bulletin first provides an overview of the key factors that shape the scope of China’s digital game market, including the high levels of software piracy and prior prohibition on game consoles such as Xbox and PlayStation. As a result of these factors, China’s game market is essentially an online game market, and this primer therefore focuses upon the regulation of online games. This preliminary section also explains China’s policy of prohibiting foreign (meaning non-PRC) companies from operating online games in China.
In recognition of China’s powerful government authorities, before discussing any specific laws, we first introduce the primary regulator of the online game industry. Prior to March 2018, there were two primary regulators for the industry: the National Press and Publication Administration (国家新闻出版署) (“NPPA”) and the Ministry of Culture (文化部) (“MOC”). After March 2018, NPPA became the sole primary regulator for the online game industry in China. Although MOC is no longer a primary regulator for the industry, it still supervises some matters that relate to the online game industry, such as game console production, game live streaming and internet cafés, a traditional primary venue for online game players in China, and has the authority to enforce regulations issued by NPPA.
The first set of rules we discuss are those for the game approval that must be obtained for each game prior to commercial launch in China. Because foreign game companies are the primary readers of this bulletin, but foreign game companies are not legally permitted to directly operate online games in China, the game approval rules are those that are of greatest relevance to most readers. We also discuss how the approval rules applicable to domestic games differ from those applicable to foreign games.
We then turn to the regulations applicable to the operation of online games in China, including the two required licenses, as well as general rules relating to the anti-addiction and real-name verification system and the age labeling system. Although these rules do not directly affect foreign game companies because they are not permitted to operate online games in China, the information contained in these sections helps provide a more comprehensive overview of the regulatory framework for China’s online game industry.
Finally, in light of the growing interest in blockchain technology and non-fungible tokens (“NFTs”) for the game industry globally, we also discuss general policy related to blockchain games and NFTs in China, and provide an example of compliant in-game NFT practice.
The scope of this bulletin is limited to the key industry rules, namely those relating to game approvals, operating licenses and anti-addiction matters. Other rules that are relevant to China’s online game industry, but lie outside the scope of this bulletin, include rules relating to virtual currencies, live online streaming, user data protection, internet cafés, e-sports and government tax and incentive measures.