Tencent tightens gaming rules as Beijing targets $43 billion sector | World Weekly

Chinese Business and Finance Updates

Tencent has announced new restrictions limiting how long minors can play online after the Chinese internet group came under heavy pressure from state media, which described the gaming industry as “spiritual opium”.

In a social media post, the company said it was taking the measures after “competent authorities” requested greater protections for minors in games and for companies to assume their “community responsibility”.

Shares in Tencent, whose online gaming business generated 39.1 billion renminbi ($6 billion) in the first quarter and accounted for 30 per cent of its total revenue, fell as much as 10.8 per cent in Hong Kong before paring losses to drop about 6 per cent. cent after the company’s announcement.

The renewed volatility came after Chinese technology stocks posted their worst month since the global financial crisis in July after an unprecedented regulatory crackdown against technology sectors including education, car service and social media.

Tencent’s new restrictions, which will initially only apply to its main title honor of kingsIt will also reduce how long minors are allowed to spend games each day, ban anyone under 12 from in-game spending and restrict minors playing on adult accounts.

Tencent has also put forward three proposals for the entire industry including strengthening regulations to tackle gaming addiction and has called for consideration of a complete ban on those under the age of 12.

The Chinese internet giant’s announcement followed an article in the Economic Information Daily, which is run by the official news agency Xinhua, that said online video games had grown into a “spiritual opium worth hundreds of billions”. One expert warned that “no industry . . . can develop in a way that destroys a generation.”

The article published on Tuesday morning did not mention Tencent by name but did complain about widespread internet addiction among China’s youth. It quoted unnamed students as saying that some of their classmates spend up to eight hours a day honor of kings He warned that this “new type of electronic medicine” was “advancing by leaps and bounds”.

The historically charged comparison, likening Chinese video game makers to foreign sellers of opium whose trade contributed to the disintegration of the Chinese empire, also sent shares of some Tencent competitors sharply lower in morning trading.

NetEase and XD are down 15.7 and 21.8 percent, respectively. The video game market in China was valued at $43.1 billion in 2020, according to Niko Partners, a research and advisory firm.

The state media’s attack on Chinese technology groups also affected stocks in Shanghai and Shenzhen. These prices have stabilized in recent days after a conference call in which China’s securities regulator sought to reassure global and domestic financial groups about Beijing’s crackdown on the sector.

In recent weeks, Beijing has called for a new offshore listing system, imposed data security reviews on companies seeking to sell shares abroad, and banned the country’s $100 billion private tutoring industry from taking profits. This has made the sector’s top three companies “virtually uninvestable,” according to JPMorgan analysts.

Pressure from regulators and state media points to a new challenge for Tencent, which controls social networking and payments app WeChat everywhere in the country and, until recently, was relatively unscathed through regulatory onslaught.

That changed abruptly last week, when the company announced that it was halting all user registrations for WeChat because it had updated its security technology “to comply with all relevant laws and regulations.” Tencent’s stock has fallen by more than a quarter over the past month.

“The timing of the article certainly raises concerns among investors due to the drastic measures we have seen recently [on Chinese tech]said Daniel Ahmed, Senior Analyst at Niko Partners.

But, he added, it’s not the first time that games have been compared to drugs in China. The article’s publication also followed rules that took effect on June 1 requiring companies to verify players’ ages and identities to limit the time minors spend playing.

Video: Will China become the center of the global economy?

Source link