Playtime is over for China’s young gamers. China’s video game regulator has introduced new restrictions for online gamers under the age of 18, who will now only be allowed to play for an hour on Fridays, weekdays and holidays. While this new rule is unprecedented, it is not that surprising following recent commentary from China’s state-run publications around the growing negative impact excessive gaming can have on young people’s mental health.
The move has already prompted significant decline in the share values of China’s online gaming brands, with the businesses themselves responsible for preventing children from playing outside of these new guidelines.
The move may have significant impact for retail brands, many of whom have heavily invested in the fast-growing, lucrative channel of gaming as a means of communicating with the often hard-to-reach Gen-Z audience. Earlier in the pandemic as gaming boomed, we saw luxury retailers including Valentino, Marc Jacobs and GCDS take their fashion to Nintendo’s Animal Crossing. In China, Louis Vuitton were an early entrant into the gaming ecosphere, partnering with League of Legends to produce in-game skins for players and a real-world collection based on the game, while Dior and Fendi have worked with China’s esports players to promote the brands’ capsule collections.
It’s clear to see why these brands have been tapped into the market, with the global gaming industry estimated to be worth nearly US$176 billion. China alone is responsible for 667 million players, with revenue for US$23.28 billion in the first half of 2021 and the market set to reach US$55 billion with 781 million players by 2021 (Jing Daily). The gaming community in China leans both young and female – crucial demographics for the country’s competitive retail industry.
Yet the recent restrictions mean brands will have to tread carefully when it comes to marketing to the Gen Z audience on these platforms, or else risk letting their well-planned gaming investment go to waste. And in the precious three-hour timeframe in which under-18s can access these gaming platforms, their attention will likely attract a premium during this time, with many in the industry expecting in-game advertisers to significantly raise costs of targeting this demographic. Alternatively, with increased scrutiny from the government on the mental health of minors using gaming platforms, advertisers may find themselves unable or unwilling to continue using gaming as an advertising channel to target these younger audiences.
We may see brands shift to alternative ways to reach gaming-hungry audiences through alternative routes. Investment in partnerships with esports players and live-stream gamers (over the age of 18) may grow at an even more rapid rate, as young gamers seek to get their gaming fill vicariously through others. Similarly, social conversations and UGC around gaming are expected to peak as these restrictions take place.
While these new regulations may not be game over for brands, it’s clear that advertisers in China will need to rethink their approach to the lucrative gaming market, while elsewhere across the globe brands may need to reconsider their approach to targeting younger audiences on these platforms should the regulations have a ripple effect. Yet a multi-pronged approach which focuses on gaming conversations, and not just the gaming platforms themselves, may allow retailers to continue to reach these valuable, discerning audiences with relevant content that further boosts brand loyalty.
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