Chinese Official Fired After Backlash Over Latest Gaming Industry Regulatory Plans

The war on China's video game industry by the Chinese government continues, but it appears that its casualties aren't only within the industry itself. Over the last couple of years, the Chinese government has put more and more restrictions on the gaming industry, primarily aimed at youths, that were designed for everything from restricting how long games can be played, to how much time they can spend watching video game streams, and so on. There was a bunch of talk early on about so-called video game addiction", except the government more recently declared victory over that addiction. Meanwhile, to date, all of those actions have resulted in thousands of businesses in or reliant on the gaming industry closing their doors and packing it all up.

That bloodbath wasn't good enough for Beijing, it appears, as regulators within the government published a draft of new regulations that would severely curtail gaming companies' ability to create games with in-game purchases, reward daily play, or incentivize longer play-times. You know, basically everything that is modern gaming these days. The reaction to these announced plans was swift and brutal.

In Hong Kong, shares of internet giant Tencent, which has stakes in game developers, closed 12% lower to notch its biggest one-day drop since 2008.

Shares of online gaming competitor Netease also tumbled 25% during Asian trading hours, and the Hang Seng Tech Index dropped 4.37%.

There were knock-on effects from non-Chinese companies in other markets too, but the most blood was spilled directly in China out of Chinese companies' stock values. Anyone who knows the first thing about Chinese politics will know that these drafted regulations were not the work product of one individual going rogue and almost certainly went through several layers of approvals before they ever saw the light of day.

But that informed individual will also not be surprised to learn that the Chinese government's response to the backlash wasn't merely walking the new regs back, but offering up a single individual as a sacrificial lamb.

Feng Shixin was the head of the publishing unit of the Chinese Communist Party's publicity department. In this position, Feng had oversight of China's video game regulator. Feng was fired last week, according to aReutersreport published Tuesday.

Sources familiar with the matter told Reuters that Feng's departure was linked to the slate ofproposed video game restrictionsannounced on December 22.

This is pure single-party face-saving by the Chinese government, but it also demonstrates at least some minor cracks in the authoritative stance it usually takes. The backlash was severe enough to cause the government to backpedal and pretend that Shixin did this all on his own, but it was probably the financial component of that backlash that was the prime mover for all of that.

So Shixin is out of a job and we're left waiting to see if Beijing wants to try a more pared down version of its restrictive regulation on video gaming. Or the government could stop being so obsessed with how its people spend their entertainment time and money.

Somehow I expect we'll never see the latter.