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Moves to limit online play to three hours will improve the industry's image but may hit bottom lines

Wang Yue is what the mainland online gaming industry calls a 'hardcore' games enthusiast. A typical evening finds Mr Wang, a 26-year-old graphic designer, in front of his computer, devoting three hours to unearthing virtual treasures and slaying dragons in the World of Warcraft, one of China's most popular massive, multiplayer online games.

On weekends, Mr Wang builds fortresses and raises armies for an average of five hours a day.

'This is my way of relaxing,' he said.

The central government wants to curb the amount of time that gamers like Mr Wang lose themselves in the virtual worlds of online role-playing games, which have been blamed for truancy, death from exhaustion and even murder.

In response to growing concerns, the General Administration of Press and Publication (Gapp) on August 23 announced a compulsory 'anti-fatigue' system limiting a gamer to three consecutive hours of play.

After that point, the system reduces a game character's ability by half. After five hours of continuous play, a player's character capability is reduced to the lowest possible level, and he must wait for a minimum of five hours for the program to reset.

Although the system will eventually apply to the mainland's 200-plus online games, it will initially affect the role-playing games, the key targets of the Gapp mandate.

Trials of the new system for selected online games operated by Shanda Interactive Entertainment, NetEase.com, The9, Optisp, Kingsoft, Sina.com and Sohu.com were rolled out in test versions to the public last month.

A fully operational system could be launched by year-end or early next year pending agreement on the finer points of the system's implementation by Gapp officials and the seven online game publishers, according to Ken Li, marketing director of Netease's online game division.

The mainland's top two game operators said they were not worried by the Gapp mandate.

'The system does not affect us a lot,' Mr Li said. 'On average, our games get 2?-hours of play. The system will only affect a minority of players.'

Shanda echoed the sentiment. 'The system won't influence much of Shanda's present operation,' Shanda spokesman Li Lijun said, noting that 80 per cent of its gamers played for fewer than three hours.

The9, which operates the World of Warcraft, declined to comment. The game accounted for 94 per cent of its US$6.7 million second-quarter sales.

The consensus among analysts and insiders is that although the new system could weigh on revenue in the short term, it is necessary to give the industry a much-needed makeover of its image, which has been battered by negative publicity.

'For some companies, their near-term outlook will be adversely impacted,' said Morgan Stanley analyst Richard Ji, declining to name which ones.

'But long term, it is a healthy thing. It will clean up the lingering concerns of  parents and allow [the online game companies] to get support from the peripheral community.'

The new rule could shave the industry growth rate from 30 per cent to 25 per cent, according to one equities analyst. The impact on a particular game title, however, will depend where it is in its growth trajectory.

'Do they still want to play the game, or is it old and people are losing interest?' he said. 'If you love it, would you give up so easily? Maybe you'll play three hours today and two hours tomorrow. Peak concurrence might go down, but overall, the playing hours could average out.'

The Gapp mandate also raises questions about the billing models of the game operators. Netease charges its players 5 US cents per hour of play. Others, like Shanda, charge a monthly subscription ranging from US$4.40 to US$5.60 for unlimited play.

The new three-hour cap, however, could be seen as negating the 'unlimited play' claim. Yet not every game has the clout or popularity to command an hourly charge, which is more profitable for the game operator. Shanda declined to say whether it planned to change its billing approach.

Some say any move to cancel the monthly subscription model will backfire.

'It's not that easy,' said Jim Sun, an analyst in the Shanghai office of Evolution Securities. 'Their customers will leave.'

Mr Li agreed. Any kind of sudden change will be the 'end of the game and is bad for the company's image'. He said Chinese consumers were 'emotional and united', and did not take well to wholesale changes of this kind.

While the new system is expected to dampen the industry's short-term revenue outlook, whether it can engender the intended outcome remains anyone's guess. Savvy and hardcore players  will not be deterred by the new rules, according to industry insiders, and by some accounts, gamers are already gearing up to outsmart the system.

'[The rule] seems like a heavy-handed approach by the government,' said Ed Lucero, who runs China Games Partner, a back-office service provider for online games companies. 'How will they implement this? Will they be able to execute? Online gamers know their way around the system. It's a cat-and-mouse game. When someone finds a work-around, it will be posted on an [online bulletin board].'

For the developers, a challenge will be how to engage the players under a three-hour time limit. Noting that some missions can take more than three hours to complete. Mr Li said one possibility was that the games would focus on shorter missions that could be completed in three hours or less, or encourage the formation of teams to complete missions in shorter durations.

In the meantime, online game operators and gamers are taking the government's mandate in their stride. The operators are relieved the rule applies across the industry, with no operator singled out.

For gamers like Mr Wang, online games are just that - games, and should not be taken too seriously.



Time's up for hardcore gamers