China’s state newspaper called games “electronic drugs”, the stock of the whole Chinese game industry went down

Shares of a series of game companies in China, including the giant Tencent and its rivals, have had a terrible day after an article published in a Chinese state newspaper. It shows that, after Alibaba, Tencent and the Chinese game industry are becoming the next target of the country’s regulators.

On Tuesday, the Economic Information Daily, a state-owned newspaper, published an article criticizing game addiction, arguing that excessive gaming has bad effects on children and emphasized the call for calls from experts about regulators tightening their controls.

It read: ” Society has recognized the harmful effects of online gaming and it is often referred to as ‘opium for the mind’ and ‘electronic drug.’ ” However, only hours after posting it. Downloaded, the article was taken down and then republished with these harsh criticisms toned down.

Still, that’s more than bad enough for shares of Tencent and companies in the Chinese gaming industry. Shares of Tencent fell 6.1% in the close of trading, while its rivals NetEase and  posted equally bad drops, 7.8% and 3.4% respectively.

This reflects investors’ concerns over the risk that Tencent and the Chinese gaming industry will become the next target of the country’s regulators in curbing the tech giants. Alibaba is becoming a valuable lesson for other firms when it comes to sanctions from regulators.

Since 2018, new titles have also been stopped from licensing for a period of time, causing Tencent to lose more than $ 1 billion in revenue. Since then, the company has always worked closely with these agencies to bring new titles to the Chinese market.

The requirements for new game content have also become stricter. From the beginning of this year, content related to violence, pornography and other unwanted content, was banned. Besides, the game time for young gamers is also limited.

To meet these stringent requirements, Tencent earlier this month launched a facial recognition system to restrict children from playing games at night.

Yesterday Tencent announced new rules, starting with the game “Honor of Kings” with playtime limits even stricter than required by the regulatory authorities. Young gamers will only be able to play 1 hour during the week and 2 hours on weekends and holidays, and children under 12 years old will also not be able to buy and sell in the game.

The title “Honor of Kings” was the highest-grossing mobile game in both 2019 and 2020. Last year, mobile games helped bring Tencent record revenue of $22.7 billion and and the contribution from PC games is 6.9 billion USD.

Refer to WSJ