The two largest companies in the development of Chinese video games they lived a black day following new government regulations to limit spending on gaming. Is about Tencent y NetEase what They lost about US$80 billion of their market value.
The new rules, which will effectively set spending limits for online gaming, They unleashed panic among investors, causing almost $80 billion in market value to disappear. of China’s two largest video game companies, as investors tried to gauge the possible impact on profits and more restrictions on the horizon. The actions of Tencent Holdings, the largest video game company in the world, plummeted up to 16%while those of NetEase, his closest rival, plummeted up to 25% dAfter the National Press and Publications Administration presented the new draft standards.
Shares of tech investor Prosus followed Tencent lower, losing 14.2% in early trading on Friday and ranking among those that fell the most in the pan-European stock index. Prosus owns a 26% stake in Tencent.
The vice president of Tencent Games, Vigo Zhang, said Tencent will strictly implement regulatory requirements. The new draft rules have not deviated from regulators’ current goal of ensuring companies have “reasonable business models and operational cadences,” he said. Zhang added that Minors have been spending a historically low level of money and time on Tencent games since 2021, when the protection of minors became a focus of attention for Beijing.
What are the regulations that China will put on video games?
Now will be banned that the online games the rewards to the players if they connect every day, if they spend in the game for the first time o if they spend several times in the game consecutively. They all are usual incentive mechanisms in online games.
“Removing these incentives is likely to reduce the number of daily active users and app revenue, and could force publishers to take a hard look at their game design and monetization strategies,” said Morningstar analyst Ivan Su.
pokemon unite tencent
Pokémon Unite is a popular mobile game developed by Tencent for The Pokémon Company.
The Pokémon Company
Also Games are prohibited from offering probabilistic drawings to minors and from allowing speculation and auctioning of virtual game items. But the new rules include a proposal that is expected to be welcomed by the sector: requiring regulators to process the approval of games within 60 days.
“It’s not necessarily about the regulation itself, but about the political risk, which is too high,” said Steven Leung, executive director of institutional sales at brokerage UOB Kay Hian in Hong Kong. “People had thought this kind of risk should be over and had started looking at fundamentals again. It does a lot of damage to confidence.”
The state of the gaming industry in China
Beijing has become increasingly tough on video games over the years. In 2021, China established strict Playing time limits for minorse 18 years old and suspended the approval of new video games for about eight months, citing addiction problems.
Although the strict measures formally ended last year with the resumption of approval of new games, the Regulators have continued to impose restrictions to curb “in-game” spending“. The new rules revealed on Friday are the most explicit aimed at curbing spending within video games. In addition to prohibiting reward features, games are also required to set limits on the amount players can load into their digital wallets to spend in-game.
The new rules also reflect Beijing’s concern about user data, requiring game publishers to store their servers in China. The administration is soliciting public comments on the rules until January 22, 2024.
As a result of Beijing’s crackdown on gambling in 2021, 2022 was the most difficult year for the Chinese video game industry, as total revenue fell for the first time. The Chinese video game market grew again this year, as domestic revenue increased 13% to 303 billion yuan ($42.6 billion), according to industry association CGIGC.
2023-12-23 00:16:13
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