The CCP softened its stance on taking aim at free-to-play monetization schemes just before the holidays. This was after "nearly $80 billion in market value" was leaked from Tencent (League of Legends) and NetEase (Diablo: Immortal).

The proposed rules were intended to target the favorite toys of the live service giants (daily login bonuses, etc.) while completely exterminating the core species of players, the big-money "whales," with strict spending limits. I am sure we players are tired of these systems, but they are not so easily defeated. In hindsight, the market panic was inevitable.

Reuters reports that despite analysts' insistence that the proposed rules would not be changed, an adjustment was announced later this month: the State Administration of Newspapers, Publications, and Guangdong, China's video game regulator, took a more conciliatory tone, saying it would improve the rules by "seriously studying" public opinion

The agency also announced that it would "study the public's opinion seriously.

The report noted that Tencent's stock rose 5% (after a 12% drop) and NetEase's stock rose 10% (after a 25% drop) after morning trading on Wednesday, December 24. There are also reports that NetEase is once again negotiating with Blizzard over the company's dramatic destruction of the Goa Hawl statue in early 2023. Presumably, this was because they had literally settled a grudge.

In addition, the CCP reportedly also dismissed a senior official named Feng Shi Xin, according to a Reuters follow-up. Shi Xin was the director of the Communist Party's Propaganda Department, which oversaw the domestic gaming industry through the National Press and Publication Administration (NPPA).

The report cites five sources, all of which believe that Shixin's dismissal is related to the draft regulations and the subsequent disastrous plunge in the stock price; Shixin has previously led similar regulations and represented the (NPPA) at several events related to government responses to the gaming industry .

Speaking to Bloomberg, a market strategist at Saxo Capital Markets in Hong Kong said that the removal of the official would help to allay investor skepticism: "If the reports are accurate, it would signal that this is not a change in policy direction. The news is positive, but not big enough to move stock prices.

It is worth noting that the market reaction has been quite dramatic and appears to have made the CPP reconsider. This is especially true because the digital curfew for gaming-loving youth adopted in 2021 was so severe that it was even enforced through the use of facial recognition technology.