Because Tencent and NetEase no longer have fun on the stock market
From China, new rules on the use of videogames for children. Tencent and NetEase feel the blow on the stock market
Game over for underage players in the land of the Dragon?
China has issued new rules for video game fans: if you are under the age of 18, you can only play three hours a week.
On Monday, the National Press and Publication Administration, the Beijing authority that regulates the publishing sector and the use of the Internet, issued new stringent measures aimed at curbing what the authorities describe as the addiction to video games of young people.
Furthermore, online gaming companies, such as China's Tencent and NetEase, would be prohibited from providing gaming services to minors in any form outside these hours. Not only that, they should make sure they have systems in place to verify the real identity of the players.
On the Hong Kong stock exchange, the stocks blamed the decision of the regulator, which oversees the country's video game market.
NetEase, listed on Wall Street as Tencent, drops 3%, after losing 4%. Tencent instead eliminates the initial losses, after having sold more than 3%. Most of the revenue of both companies comes from the video game business .
The new rule came amid a broad crackdown on Chinese tech giants, such as Alibaba, Didi and Tencent, as well as a series of reforms on activities Beijing considers harmful to younger generations, including celebrity fan culture. and private teaching.
All the details.
THE NEW CHINESE RULES FOR THE USE OF VIDEO GAMES
China has a new rule for the country's hundreds of millions of young gamers: no online video games during the school week and one hour a day on Fridays, weekends and holidays, as reported by the state-owned Xinhua News Agency . taken from the Wall Street Journal .
The new regulation, presented by the National Press and Publication Administration c, will ban minors, defined as minors under the age of 18, from playing video games online entirely between Monday and Thursday. On the other three days of the week and on public holidays, they will only be able to play between 20:00. and 21:00.
The authority move is an attempt to curb video game addiction among children.
REGISTER WITH YOUR IDENTITY
But in addition to the time limitation of videogames, for companies in the sector there is also an "obligation" included in the new rules.
All online video games must in fact be connected to an "anti-addiction" system managed by the National Press and Publication Administration. The regulation, which goes into effect Wednesday, will require all users to register using their real names and government-issued identity documents.
The new rules also stipulate that companies must ensure that players use their real names to register and must prevent people who do not use their real identity from accessing video games.
The latest move followed reports that children were using adult identity documents to circumvent the rules, Xinhua explains. Previously, the authorities had limited the playing time of young players to 1.5 hours per day and three hours on public holidays.
BARCOLLA TENCENT
Shares of Tencent, the largest gaming company in the world by revenue, fell 3.6% in trading on Tuesday. The stock has lost nearly 5% since the state media article describing gambling as spiritual opium.
This is in fact the second blow in a month for Chinese video game companies.
On August 3, an article published by the state-run Economic Information Daily stated that too much time playing online could negatively affect children, underscoring experts' calls for stricter regulation.
The article caused a significant drop in the value of the shares of some of China's largest online gaming companies.
AND NOT ONLY
The news of the new rules released yesterday has once again shaken the titles of video game companies.
US-listed NetEase fell 3.4% in overnight trading with Hong Kong shares down a similar amount on Tuesday.
Krafton Inc, the South Korean company backed by Tencent Holdings behind the hit video game PlayerUnknown's Battlegrounds (PUBG), also dropped 3.4%.
IT IS NOT THE FIRST SHOCK IN BEIJING
It is not the first time that China has approved measures to limit play between children and adolescents. In 2019, new rules required minors to only play online for up to 90 minutes per day and could not play at all between 10pm and 8am. Back then, real names and phone numbers were also required.
And the Chinese video game giant ran for cover in the meantime: in July, Tencent announced it was rolling out facial recognition to prevent children from playing between 10pm and 8am.
WHAT ANALYSTS EXPECT
Gaming is the biggest source of revenue for NetEase and Tencent. But analysts don't expect a huge impact on companies from the new rules, CNBC points out.
Tencent recently claimed that only a small amount of gaming revenue comes from younger players in China.
"We estimate that around 5% of gaming revenue comes from under 18s and we believe Tencent has an impact on earnings of around 3% if we assume that gaming contributes about 60% of total earnings," he said. Jefferies investment bank in a statement released Monday. "Minors represent a single low figure of NetEase's gaming revenue," analysts added.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/perche-tencent-e-netease-non-si-divertono-piu-in-borsa/ on Tue, 31 Aug 2021 14:34:12 +0000.