The second is the realisation that players will happily pay real money for virtual goods.
These can be upgrades, costumes or weapons for their in-game characters,
or (more cynically) a lottery-style “loot box” whose contents are unknown in advance, but might prove valuable enough to resell to other players.
Since the marginal cost of creating virtual items is zero, they are very profitable for developers.
That has given rise to a “freemium” business model, of which Tencent was a pioneer, whereby games are given away cheaply or free but players are constantly nagged to spend money on in-game items.
All this has been supercharged by smartphones, which mean people can keep playing—and paying—at all hours of the day.
The result is an unhealthy loop.
Firms strive to keep players hooked, because the more time they spend in a game, the more money they will spend on baubles within it.
Whizzy data analytics let developers tweak their products to do just that, using psychological tricks and nudges familiar from social-networking sites and the gambling industry.
All this can be extremely lucrative.
Sensor Tower, an analysis firm, reckons that “Candy Crush Saga”, a popular game in the West, made $930m last year.
The keenest gamers, known as “whales” (a term coined by casinos to describe high-rolling customers), can spend thousands of dollars a year.
Tencent is trying to placate the Chinese government.
It is expanding its age-verification scheme and limiting screen time for children.
Its counterparts in other countries should take note.
This newspaper does not generally believe governments should tell adults how to spend their money.
But the industry could do more to protect children and addicts from its increasingly sophisticated products.
It is in its own long-term interests to do so.
Video games now rival the film industry for clout.
Gaming is thought to be worth around $140bn annually worldwide, and is growing at 13% a year.
But society’s attitude towards technology is hardening.
In a world of fake news and hyper-targeted advertising, voters and politicians have awoken to the danger that devices and data may be manipulating people in harmful ways.
A little voluntary forbearance now could save a lot of regulatory pain later.