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Tencent and NetEase can only provide online games for minors from 8pm to 9pm (00:00 to 01:00 GMT) on Fridays, weekends and holidays.
China will limit children’s playing video games to a maximum of three hours a week. The sharp escalation of restrictions has taken a toll on the world’s largest mobile gaming market, as Beijing says it will continue to control the expansion of large technology companies. company.
The state news agency Xinhua cited a notice from the State Administration of Press and Publication that the game platform from Tencent Holdings Co., Ltd. to NetEase can only provide online games to minors from 8 pm to 9 pm on Fridays, weekends and public holidays. . The new rule is a major improvement over the 1.5 hour per day limit for most of 2019.
Escalating restrictions on the lucrative gaming business may scare investors who have returned to Chinese stocks cautiously in recent days. A large number of regulatory investigations in areas ranging from online commerce to data security and ride-hailing have triggered a sell-off of trillions of dollars. After that, they are looking for bargains in the past few months.
Niko Partners analyst Daniel Ahmad said: “This ruling is by far the most stringent, and it will fundamentally eliminate most of the expenditures of minors. We note that this is already very low.”
Later that day, Beijing said it would continue its efforts to control large technology companies. According to Xinhua News Agency, a high-level committee headed by Chairman Xi Jinping stated that efforts to prevent “disorderly expansion of some platform companies” have been successful, and at the same time vowed to “improve transparency and predictability” when formulating policies.
According to Xinhua News Agency, Xi Jinping also stated at the meeting that anti-monopoly policies are a necessary condition for improving China’s economy.
NetEase fell 9.3% in premarket trading in New York, while Prosus NV, Tencent’s largest shareholder, fell in Europe.
“Three hours a week is too stressful. Such a policy will also have a negative impact on Tencent,” said Steven Leung, executive director of UOB Kay Hian (Hong Kong) Co., Ltd. “I think the regulatory measures will gradually rest, but it will not stop at all. This will definitely hurt the emerging technological rebound.”
Tencent and other companies say that children account for only a small part of their business, especially after recent restrictions. China’s largest gaming company stated that minors’ income is less than 3% of its total gaming revenue in China.
Other key points in the new rules include:
- All online games should be linked to the national anti-addiction system, and companies must not provide services to users who have not registered with their real names
- Regulators will step up checks on how gaming companies limit game time and in-game purchases
- Regulators will work with parents, schools and other members of society to combat youth game addiction
The new regulations emphasize the extent to which Beijing is committed to curbing young people’s addiction to gaming and pushing its future workforce to pursue more efficient jobs. Earlier this month, the state media published powerful criticisms of the industry and once called the game “mental opium.” The description was later deleted, but due to concerns about further restrictions, the stock price plummeted.
What Bloomberg Intelligence says
The financial performance of Tencent, NetEase and other Chinese online game companies may only be slightly hit by tightening the time limit for minors to play games to 3 hours per week… although profit margins may be squeezed to accelerate in the short term Growth introduced compliance measures.
– Matthew Kanterman and Tiffany Tam, analysts
In 2018 and 2019, Tencent was struggling to cope with the widespread suppression of the gaming industry, and then focused on child myopia, while also struggling to cope with the massive tightening of regulations in areas such as social media, online finance, and commerce.
It actively reduced the number of hours that minors play games, but the company is not as strict as the new government regulations. It limits minors to one hour on working days and two hours on holidays and holidays.
“Since 2017, Tencent has explored and applied a number of new technologies and new functions in the protection of minors,” Tencent said in a statement. “This will continue because Tencent strictly abides by and actively implements the latest requirements of the Chinese authorities.”
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