The new rules will set a spending limit for online games, wiping off close to $80 billion in market value from China’s two biggest gaming companies, as investors tried to measure the impact on earnings. In 2021, China set strict playtime limits for people under 18 years of age and suspended approvals for new video games for nearly eight months due to addiction concerns.
In 2021, China set strict playtime limits for people under 18 years of age. (Photo: X/@DamienLive)
Beijing: Chinese regulators announced several rules which are aimed at curbing spending and rewards that encourage video games, which is a blow to the world’s biggest games market that had regained growth this year.
The new rules will set a spending limit for online games, wiping off close to $80 billion in market value from China’s two biggest gaming companies, as investors tried to measure the impact on earnings, Reuters said in a report.
As per new rules, if players log in every day, and spend on the game for the first time or multiple times, online games will now be restricted from giving them rewards, all of which are very usual incentives in online games.
According to the news agency, shares in Tencent Holdings (0700.HK), the world’s biggest gaming company, collapsed as much as 16% at one point, while those of its closest competitor, NetEase (9999.HK), plunged as much as 25% after the new draft rules were published.
Steven Leung, executive director of institutional sales at broker UOB Kay Hian in Hong Kong, said, “It’s not necessarily the regulation itself – it’s the policy risk that’s too high.” He added, “People had thought this kind of risk should have been over and had started to look at fundamentals again. It hurts confidence a lot.”
Over the recent years, China has become increasingly tough on online games. In 2021, China set strict playtime limits for people under 18 years of age and suspended approvals for new video games for nearly eight months due to addiction concerns.
(With inputs from Reuters)
