Tencent share price drops after China bans Monster Hunter: World sales on WeGame

This is a monstrous blow for the Chinese online game storefront.

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Monster Hunter: World's PC launch is going strong on Steam, but sales of the game have been banned from Chinese gaming platform WeGame. Tencent's Steam competitor in China is the go-to spot to download Fortnite in the country, but it seems that Monster Hunter: World did not meet regulatory requirements. Share of Tencent (700:HK / TCEHY) fell over three percent in Hong Kong trading on the news. WeGame has been a bright spot in the revenue growth at Tencent with the success of PUBG and Fortnite along with some other mobile game standouts. Tencent is set to report earnings on Wednesday.

A source close to WeGame told the Financial Times that "bureaucratic infighting" inside China's new media regulator led to the removal of the game. Monster Hunter: World has sold over eight million copies of the game before its PC release. WeGame had the game for sale on August 8, and the one million customers who were lucky enough to buy the game before its removal by regulators will be able to apply for a full refund if they apply before August 20. After that date, there is no guarantee that they will be able to play the game, but there is no guarantee that the game will be playable for WeGame users over time. 

While this is a bad sign of things to come for sales of games in China, Tencent is profiting off of other investments in the video game industry. The company owns 40% of Epic Games, the creators of Fortnite, and are sharing in the vast profits from the ongoing mania surrounding the battle royale game. It is never good to hear of a game being banned in such a large market, but Tencent remains very diversified. Traders and investors should pay close attention when the company reports their earnings results later in the week. Today's news is hugely disappointing for Capcom and Tencent as well as Chinese gamers who just wanted to go on adventures with their Palicos.

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Asif Khan is the CEO and majority shareholder of Shacknews. He began his career in video game journalism as a freelancer in 2001 for Tendobox.com. Asif is a CPA and was formerly an investment adviser representative. After much success in his own personal investments, he retired from his day job in financial services and is currently focused on new private investments. His favorite PC game of all time is Duke Nukem 3D, and he is an unapologetic fan of most things Nintendo. Asif first frequented the Shack when it was sCary's Shugashack to find all things Quake. When he is not immersed in investments or gaming he is a purveyor of fine electronic music. Asif also has an irrational love of Cleveland sports.

From The Chatty

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      August 14, 2018 5:46 AM

      I don't understand... why was it banned?

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        August 14, 2018 5:59 AM

        A source close to WeGame told the Financial Times that "bureaucratic infighting" inside China's new media regulator led to the removal of the game.

        Not enough of the regulators were bribed. ;)

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          August 14, 2018 6:30 AM

          We all know what "bureaucratic infighting" means... China has a UT vs Quake problem, too!

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          August 14, 2018 10:16 AM

          I've read two explanations on the Monster Hunter subreddit in the last couple days. Usually, China bans stuff because it's not majority owned by a Chinese company. In the case of Monster Hunter, it was published by Tencent and distributed on Tencent's China-approved store rather than Steam. Either:

          A) A bunch of pro-Steam users in China trolled the game with bad reviews so that it got delisted as a way to hurt the only legitimate competitor to Steam in China (which is still used through VPNs)

          B) or the government banned it as part of a crackdown on Japanese media, which they've been pushing back against because it's seen as becoming dominant over Chinese culture. Apparently even importing a Japanese game console in China now causes you to take a hit to your social score.

          Either way, it should be a huge red light to any game company that thinks China is a lucrative market to get into. It's only profitable as long as you don't cross any arbitrary and ever-changing rules that are based around China owning as much of your product as possible.

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            August 14, 2018 10:22 AM

            I'm just making a shitty statement about Communist countries and how shit sometimes works there.

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            August 14, 2018 10:36 AM

            god damn

            fuck china

            for real

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        August 14, 2018 10:32 AM

        The board in China that regulates all media (not just games, but film and TV) was reorganized earlier this year. Since that point, they have not actually granted any licenses for games to be published.

        So Tencent goes ahead and puts out MHW on WeGame, and people started to complain that its online elements have problematic parts, and they complain to the gov't, and this board tells Tencent that they have to pull the game's online connectivity.