Online gaming and market failure

Plenty of politicians have their eye on the harmful consequences of online gaming. There are stories of gamers playing for such continuously long time periods they wear diapers to avoid pauses in play. Whilst this kind of playing might be rare, there are many young people who have become addicted to gaming. There are also concerns about violence and the sexually explicit content of some video games. 

The new 3 hours a week rule introduced by China’s video game regulators means that under 18 online gamers will only be allowed to play for one hour a day on Fridays, weekends and holidays. Online gaming companies will now be prevented from providing gaming services to young people outside those hours and would need to put into place name verification systems to stop gamers avoid the regulations.

There is increasing concern amongst the Chinese authorities about online gaming by young people with Xinhua the state media outlet branded online games "spiritual opium".  Regulatory checks on online gaming companies will increase to make sure the time limits are adhered to.  

A report published by the state-run Economic Information Daily claimed there is evidence that many teenagers have become addicted to online gaming, and it was having a detrimental impact on their welfare.

Technology companies are introducing their own measures to make sure young people are following the regulations. For example, the Chinese gaming company, Tencent has introduced facial recognition technology to stop children using their parent’s ID and gaming through the night.  

Points to discuss with a class

There are some important things to consider in this policy move by the Chinese government:

Are online video games an example of a demerit good?

To what extent is online gaming an example of market failure?

Do you think this type of regulatory policy by the Chinese government is an effective way to deal with the problems caused by online gaming?