Japanese social game networks take a hit over regulation concerns – Long Range RFID Reader Manufacturer

Reports of impending Japanese regulations for social game networksand their random virtual goods have cast doubt over the futures ofGree and DeNA — and their stock prices have tumbled as a result. Japan’s Consumer Affairs Energy has reportedly decided that “kompugacha,” a common online game practice of rewarding players with arandom virtual prize — which can be a rare or ho-hum item — afterpurchasing a set of goods, is illegal, according to The Daily Yomiuri. The Korean government has sought to regulate online games in itscountry over similar concerns . Various departments there have argued that “Jackpot items,” ormicrotransactions for random virtual goods, constitute as gambling,and seek to impose limits on them. Barrier Gates

CEA began investigating these concerns after receiving dozens ofcomplaints over expensive charges from consumers who played gameswith the random virtual prizes. Some parents have also alleged thatthe addictive nature of these microtransactions led their childrento spend as much as ¥120,000 ($1,500) on them in just a fewdays. Two weeks ago, Gree and DeNA instituted a monthly cap on how much younger players could spend on virtual goods for theirsocial games. Teens and children are now restricted from spendingmore than ¥5,000 ($61.79) and ¥10,000 ($123.58), dependingon their age range. CEA will purportedly request that Japanese social game networkslike Gree and DeNA (Mobage) cease this practice on their services,and will fine companies that do not comply. Long Range RFID Reader Manufacturer

Those two firms havedeclined to provide a comment on the matter so far, though Gree hassaid it will make a statement once it receives the request. Stockholders have chosen not to wait for that news, though, asthose companies’ share prices plunged on the Nikkei index — Gree’sshares fell by 23 percent, while DeNA’s fell by 20 percent. Localsocial network firms Mixi and CyberAgent (Ameba) saw their stocksdive, too. Stocks for other Japanese developers that produce social games havebeen affected as well, including Konami, Capcom, and Namco Bandai.Bloomberg points out that Gree CEO Yoshikazu Tanaka, who owns a 48 percent stake in hiscompany, lost ¥56.1 billion ($702 million) today. The news comes during a critical period for Gree and DeNA, as bothare currently making aggressive efforts to expand beyond Japan andto the West, securing big investments and acquisitions to buildmomentum for their respective social networks. Traffic Barrier Gates

Gree expects to launch its new global mobile social game platformin the coming months, and virtual good sales make up a big portionof its revenues. The company expects to bring in more than ¥160-170 billion ($2-2.1 billion) in sales by theend of its fiscal year next month.


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