Vietnam Moves to Tighten Legislation on Video Game Industry: Insights for Foreign Investors
We discuss Vietnam’s regulation of video game services, including proposed changes to existing legislation, new license requirements, and the implications for foreign businesses in this space.
Vietnam’s video game industry presents huge growth potential, thanks to its sizeable population, growing middle class, and large and internet-savvy youth cohort. Total video game market revenue was estimated to be at US$489.3 million in 2022 and is projected to reach US$750.6 million by 2027.
However, Vietnam imposes strict censorship regulations on video game content. It prohibits the so-called “cross-border” provision of video games by requiring foreign developers to establish an entity in the country in order to sell their games in the Vietnamese market. In addition, players under the age of 18 are limited by law to 180 minutes of playtime per day.
Due to the relatively strict regulatory environment but historically weak law enforcement, the prevalence of unlicensed, illegal, and pirated games in Vietnam is high. In recent years, the government has been battling with the proliferation of such games, sporadically requiring hosting platforms, such as Apple’s App Store and Google Play, to remove non-compliant games.
In March 2023, the MIC announced that it would block payments to unauthorized games, requiring intermediary payment platforms to bar payments to illegal games.
But the MIC is looking to go further with respect to regulating the video game industry.
Decree No: 2023/ND-CP (a “draft decree”), released by the MIC in July 2023, has been drafted with an objective to replace Decree No. 72/2013/ND-CP on the Management, Supply, and Use of Internet Services and Online Information, originally released 2013, as well as a supplementary amendment released in 2018, Decree 27/2018/ND-CP (collectively referred to as “Decree 72”).
Decree 72 is the country’s main piece of legislation on the management of online services, including social media and video games. The MIC has proposed, and is soliciting public feedback, a new draft decree that would replace Decree 72. The MIC is taking feedback up to September 15, 2023.
In this article, we look at Vietnam’s regulation of video games services, including gaming licensing requirements and content restrictions, and discuss some of the proposed changes in the draft decree.
Vietnam’s regulation of video and online game services
Vietnam’s video game market is regulated by Decree 72, along with other cybersecurity, telecommunications, and data legislation. Under Decree 72, video games and video game providers are subject to certain licensing requirements and content restrictions.
Decree 72 applies to both “Vietnamese and foreign organizations and individuals directly engaged in or related to the management, provision, and use of Internet services, online information, and online games”.
Foreign companies must establish an entity in Vietnam in accordance with the country’s foreign investment legislation in order to provide video game services. This provision remains unchanged in the draft decree, meaning that the cross-border provision of video games, without an entity in Vietnam, will remain prohibited.
Note that foreign ownership in the video game sector is limited to 49 percent under Vietnam’s current foreign investment regulations. This means that companies looking to legally distribute video games in Vietnam will be required to set up a joint venture or sign a business cooperation contract with a local company.
Video game classification
Video games are classified in two different ways under Decree 72: by “method of service provision” and by the game contents and age range of the intended players. The licensing requirements for a game are determined by the game’s classification under these two systems.
Under the method of service provision, video games are organized into the following categories:
- G1 games: Video games that have interaction between multiple players via the server;
- G2 games: Video games that only have interaction between the players and the server (but no interaction between different players);
- G3 games: Video games that have interaction between multiple players but no interaction between the players and the server; and
- G4 games: Video games that are downloaded from the internet without interaction between players or between players and the server.
Under the age categorization method, games are classified as follows:
- 18 and up (denoted as 18+): Games with continuous protest and combat activities using weapons of a violent nature; no sexually explicit activities, sounds, images, language, or suggestions.
- 12 and up (denoted as 12+): Games involving resistance and combat activities with the use of weapons, but the weapon imagery is not displayed in close-up or clear detail; there is a moderate amount of sound and weaponry during combat; there are no activities, images, sounds, languages, dialogues, default character imagery, explicit content, or scenes that draw attention to sensitive body parts.
- Players of all ages (denoted as 00+): Animated simulation games in which there are no weapon-based activities; there are no eerie sounds or imagery, horror, or violence; there are no activities, sounds, languages, dialogues, default character imagery, explicit content, or scenes that draw attention to sensitive body parts on the human body.
The draft decree released in July 2023 also adds an additional “16+” age category:
- 16 and up (denoted as 16+): Games that involve protest and combat activities using weapons; no activity, imagery, sound, language, dialogue, sexually suggestive characters, or content that draws attention to sensitive body parts.
The video game provider is required to display the game’s age classification on the top left-hand corner of the game’s advertisements and the top left-hand corner of the screen while the players are playing the game.
Requirements for video game licensing
In order for a company to provide G1 games, it must obtain a license to provide game services and receive approval for the game’s contents from the MIC.
To provide G2, G3, and G4 games, a company must obtain a certificate of registration and announce the service provision for each video game.
Companies must meet the following requirements to provide video game services in Vietnam:
- Be established in accordance with Vietnamese law and have a certificate of business registration for video game services;
- Have registered domain names for the services;
- Have sufficient financial and technical capacity, organizational structure, and personnel suitable for the scale of operations; and
- Have measures in place to ensure information safety and security.
The validity of a video game license may vary depending on the request of the company but cannot exceed 10 years under the current Decree 72. However, this time limit has been reduced to five years in the draft decree.
Companies that provide G1 games must also meet certain structural requirements, which are:
- Have a head office with a clear address and telephone number; and
- Have a team of electronic game administrators suitable to their operation scale, ensuring at least one person in charge for every two servers.
In addition, to provide G1 games, the service provision system of the company must also meet certain criteria. This includes (but is not limited to):
- Being capable of storing and updating the personal information of players, including their full name, date of birth, permanent residence address, identity card/citizen identification card/passport number and its date and place of issue, and phone number and email address.
- Having a payment control system for the video games located in Vietnam and connected to Vietnam’s payment support service providers, ensuring accurate and sufficient updates and storage and allowing players to search for detailed information on their payment accounts.
- Being able to manage players’ playtime from 00:00 to 24:00 hours daily and ensure the total playtime of all G1 electronic games for players under the age of 18 does not exceed 180 minutes per day.
- Continuously display the player age classification for all games during the game’s introduction, advertising materials, and during the game’s service provision; and display the warning “Playing for more than 180 minutes a day will badly affect your health” in prominent positions in games’ forums or on players’ computer screens during playtime.
All of the above requirements remain largely untouched, except for a few notable changes. For instance, the draft decree has lowered the daily limit for players under the age of 18 from 180 minutes to just 60, in line with the proposed reduction of the daily limit in the previous draft amendment to Decree 72. However, whereas this was initially only proposed for G1 games, the draft decree stipulates the same requirement for G2, G3, and G4 games as well.
Moreover, the draft decree states that the warning “playing for more than 180 minutes a day will badly affect your health” should be displayed in a prominent position at least every 30 minutes during playtime (the draft decree continues to state 180 minutes in the warning despite the proposed reduction in daily playtime allowances for under-18s).
Restrictions on video game content
Video games are subject to certain censorship laws, and companies must obtain approval from the MIC to ensure that their content is not prohibited. Under Decree 72, the following content is prohibited:
- Images or sounds that are horrifying, incite violence and brutality, are vulgar, erotic and obscene, immoral, contrary to traditional ethics and culture and national customs, or distort and undermine history; and
- Images or sounds that depict suicide, use of drugs, alcohol, and tobacco, or terrorism, child maltreatment, abuse, and trafficking, or other harmful or illegal acts.
Decree 72 also states that the content must “satisfy other requirements set by the MIC”, which provides an additional degree of discretion for the authorities in determining the legality of the content of the video game.
Companies may also not abuse the provision and use of video games to:
- Oppose the State of the Socialist Republic of Vietnam; undermine national security and social order and safety; sabotage national unity; conduct propaganda about wars and terrorism; sow hatred or division among ethnicities, races, and religions;
- Propagate and incite violence, obscenity, pornography, crimes, social vices, and superstition; harm national traditions and customs;
- Disclose state secrets, military, economic, and diplomatic secrets, or other secrets protected by law;
- Provide information that distorts, slanders, or offends the reputation of organizations or honor and dignity of individuals;
- Advertise, propagate, and trade in banned goods or services; spread banned newspaper articles, works of literature or art, and publications; and
- Impersonate other organizations and individuals and spread false and untruthful information that infringes upon the rights and lawful interests of other organizations and individuals.
In addition to the above content restrictions, the draft decree expands upon the obligations of game providers to manage in-game reward systems in an effort to stop illegal gambling in video games.
Gambling, except for the national lottery, is illegal in Vietnam (although this may be changing). Despite the prohibition of gambling, authorities have struggled to stop the proliferation of betting in online games, which can be difficult to regulate.
The draft decree adds two articles regulating “virtual items, units, and reward points” and “game cards”.
The draft decree stipulates that companies may only create virtual items, units, and reward points for the video games to be used in exchange for virtual items within the scope of the game itself.
It also expressly prohibits the integration of promotional programs with rewards (either monetary or in the form of tangible items outside the game) into the interface or features of the video game.
Virtual items, units, and reward points can also not be considered assets nor exchanged or converted into money, payment cards, vouchers, or any other tradable items outside the scope of the video game. The buying and selling of virtual items, units, and reward points between players are also prohibited.
Meanwhile, games cards (short for “online game recharge cards”), a type of internal card issued by the video game company exclusively to top up funds into legal video games owned by the same company (or a company within the same corporate group), must also be strictly managed by the company.
Entering the Vietnamese video games market
Vietnam’s video game market may be challenging for foreign developers given the strict censorship laws and extensive administrative procedures. However, the strong growth potential means the market continues to be attractive to many companies.
It is important for companies looking to enter the Vietnamese video game market to be aware of the evolving regulatory landscape as the country continues to crack down on illegal and unlicensed games. Any games considered for launch in Vietnam must either be localized to meet the country’s content restrictions or carefully selected based on the content.
Partnering with a local company, which is a prerequisite for entering the market, does have the major benefit of significantly simplifying procedures for foreign companies, as the local partner is usually responsible for receiving content approval and applying for video game licenses from the authorities.
For assistance entering Vietnam’s video game market, contact the market entry experts at Dezan Shira and Associates.
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Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout the Vietnam and the Asian region. We maintain offices in Hanoi and Ho Chi Minh City, as well as throughout China, South-East Asia, India, and Russia. For assistance with investments into Vietnam please contact us at firstname.lastname@example.org or visit us at www.dezshira.com
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