Daily Management Review

New Chinese Gaming Rules Send Shares Of Gaming Companies Down, Young Gamers Fume On Social Media


New gaming rules imposed by China for online gamers below 18 years, putting a cap of a maximum of three hours that they can be allowed to play online video games a week, hit share price of Tencent Holdings Ltd and other gaming companies, while young gamers vented out their protest against the decision on social media.
According to Chinese authorities, it was necessary to impose the new rules to prevent young online gamers from getting addicted to what was recently described as "spiritual opium" in an article published in a government mouthpiece newspaper of the country. 
An article published on Monday in the People's Daily, the official newspaper of the ruling Communist Party, after the announcement of the rules stated that the government was pushed to be "ruthless" on this issue.
The article said that the fact that normal study life and the physical and mental health of teens is severely affected by online games is "indisputable". It added: "destroying a teenager will destroy a family."
However there is anger among young Chinese gamers.
"This group of grandfathers and uncles who make these rules and regulations, have you ever played games? Do you understand that the best age for e-sports players is in their teens?" said one comment on China's Twitter-like Weibo. "Sexual consent at 14, at 16 you can go out to work but you have to be 18 to play games. This is really a joke," it added.
However the hit on the stock exchange and otherwise for online was measured as analysts argued that not much revenue for gaming companies was accounted for by children in general. Analysts however also noted that the long term implications on the growth of online gaming firms were much more severe.
"The root of the problem here is not the immediate revenue impact," said Mio Kato, an analyst who publishes on SmartKarma. "The problem is that this move destroys the entire habit-forming nature of playing games at an early age."
There was 3.6 per cent drop in the share price of Tencent, the largest gaming firm of te world in terms of revenue, on Tuesday. The stock has declined by about 5 per cent since an article in the state media, published on August 3, described online gaming as spiritual opium.
The new rules is expected to have a 3 per cent impact on Tencent's earnings, Jefferies analysts said on Monday, as they assumed that revenue from the firm’s gaming segment accounts for about 60 per cent of its total revenue.
There was also a 3.4 per cent drop in the price of stocks of NetEase, which is listed in the United States, while the Hong Kong listed shares of the company also dropped by a similar amount on Tuesday.
The stocks of the South Korean company which generates revenues in the form of fees through providing services for a similar game to its blockbuster "PlayerUnknown's Battlegrounds"(PUBG) to Tencent in China - Krafton Inc, also dropped by 3.4 per cent.