Mobile gaming giant Tencent’s stocks plunged 10 percent yesterday after Chinese state media labeled online gaming as “electronic drugs,” calling for tougher regulations to be put in place.
A report from Bloomberg claims that mobile game developers Tencent and NetEase fear Beijing will crack down on online entertainment after already cracking down on the e-commerce, ride-hailing, and online education sectors.
Fears sparked from a piece published from Xinhua News Agency, the official state-run press in China, in The Economic Information Daily. The piece reportedly cited a school student who spoke of his schoolmates spending up to eight hours a day playing Tencent’s hit mobile game Honor of Kings, the piece then calls for tougher controls to be put in place regarding screen time for children.
The article also said that video game addiction is a widespread problem that could negatively impact the growth of children, resulting in education issues, nearsightedness, and other problems.
Following the publication of the piece, which is no longer available online but can still be found in print, Tencent issued a statement announcing new measures that will be implemented to limit playtime for minors to just one hour a day during regular days and two hours on holidays. The company will also begin restricting all in-game purchases for children under 12 starting with Honor of Kings, but there was no industry-wide ban placed at this time.
While Tencent shares dropped 10 percent after the publication, alongside NetEase shares falling 14 percent. Both began to recover throughout the day, but remained substantially lower.
Tencent is known for its investment in some of the biggest games today, including Honor of Kings, Call of Duty: Mobile, the newly released Pokémon UNITE, and sole ownership of Riot Games. Following this situation, we could see tougher restrictions enforced on more of their catalog in the future.