Tencent stock falls after Chinese media calls online games 'spiritual opium'

The gaming giant took a hit after the Economic Information Daily also called games "electronic drugs".

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Online gaming is quite often an escape for a lot of gamers as they seek entertainment and relaxation after a stressful day. However, stress has found its way into Tencent investors as the stock has fallen following inflammatory writing from a Chinese news agency. The state-run Economic Information Daily called gaming “spiritual opium”.

Reported on by Zheping Huang of Bloomberg on August 2, 2021, Tencent’s stock fell 10% following China’s official news agency called gaming “electronic drugs” as well as the aforementioned “spiritual opium”. The effect was felt even further as NetEase and XD also experienced a sell-off as investors panicked over Beijing potentially tightening gaming restrictions.

The effects of the news agency’s article have also crossed international boarders. The Bloomberg piece notes that Japanese gaming stock has fell, such as Nexon, which dropped 8.1%.

According to the piece by the Economic Information Daily, the games industry – or any industry – cannot be allowed to develop in a manner that will “destroy a generation”. Certainly strong words that all but denounce gaming.

Whether further restrictions are placed on the video game industry in China remains to be seen, along with the effect it will have on share prices.

Today’s news of the Tencent stock fall comes just in time for a wealth of quarterly reports from some of the biggest names in gaming. Take-Two Interactive today revealed that the Q1 2022 earnings results beat expectations but the stock still fell in afterhours trading based on the conservative outlook for this fiscal year. And tomorrow, Activision Blizzard’s own reports will be released – which is bound to draw the attention of the industry.

For more video game finance news, you’re already in the right place. You can also read over the Shacknews Finance topic for recaps and breakdowns of earnings reports.

Guides Editor

Hailing from the land down under, Sam Chandler brings a bit of the southern hemisphere flair to his work. After bouncing round a few universities, securing a bachelor degree, and entering the video game industry, he's found his new family here at Shacknews as a Guides Editor. There's nothing he loves more than crafting a guide that will help someone. If you need help with a guide, or notice something not quite right, you can Tweet him: @SamuelChandler 

From The Chatty
  • reply
    August 2, 2021 9:30 PM

    Sam Chandler posted a new article, Tencent stock falls after Chinese media calls online games 'spiritual opium'

    • reply
      August 2, 2021 11:00 PM

      That should make the stock go UP!

      • reply
        August 2, 2021 11:07 PM

        It should make the stock go super high

        *this is not trading advice*

    • reply
      August 2, 2021 11:24 PM

      They have millions of men who will be unable to start families due to the gender imbalance caused by their 1-child policy. With a traditional life out of reach they should be happy they're playing video games instead of fomenting revolution at the local bars. Many of these men are now "laying flat", or working as little as possible as they see realize the grim situation. Why work harder for a non-existent family? Now the media's dunking on their sacrifice and want to take away their one bit of happiness in a demographic blunder

      • reply
        August 2, 2021 11:48 PM

        Wouldn’t that be hilarious if a Chinese revolution happens because the government severely restricts video gaming?

    • reply
      August 3, 2021 12:47 AM

      This is going to be interesting...

      Tencent tumbles after China media calls online gaming "spiritual opium"

      https://www.reuters.com/technology/tencent-falls-after-china-media-calls-online-gaming-spiritual-opium-2021-08-03/

      SHANGHAI, Aug 3 (Reuters) - Tencent Holdings Ltd (0700.HK) shares were on track to fall by their most in a decade on Tuesday after a Chinese state media outlet branded online video games "spiritual opium", stoking concern that the sector may be next in regulators' crosshairs.

      China's biggest social media and video game firm saw its stock tumble more than 10% in morning trade, wiping almost $60 billion from its market capitalisation.

      ...


      "No industry, no sport, can be allowed to develop in a way that will destroy a generation," the newspaper said, likening online video games to "electronic drugs".

      Tencent did not respond to a Reuters request for comment.


      They've already updated the story twice, so I'd check out the link since the story is evolving.

      • reply
        August 3, 2021 12:54 AM

        Oops.

      • reply
        August 3, 2021 12:55 AM

        Also, it sounds like it could've been a warning shot. From the updated Reuters article a few minutes ago:

        The stock was on track to fall the most in a decade before trimming losses after the article vanished from the outlet's website and WeChat account.

    • reply
      August 3, 2021 3:58 AM

      I mean...they're not wrong

      • reply
        August 3, 2021 7:24 AM

        since its behind a paywall:
        Part 1

        Shares of Tencent Holdings Ltd. TCEHY -7.39% and rivals fell Tuesday after a state-owned Chinese newspaper criticized online gaming as “opium for the mind,” fueling investor concerns that the companies’ popular games could be swept up into a broader regulatory crackdown.

        Within hours the article was no longer accessible on the paper’s website, before later reappearing with some of its harsher language removed. Meanwhile, Tencent said it would introduce stricter curbs on younger users.

        Tencent’s shares, which had dropped more than 10% earlier in the session, pared some losses after the article disappeared to close 6.1% lower in Hong Kong at 446 Hong Kong dollars a share, matching the more than one-year low it hit last week.

        Peers NetEase Inc. and Bilibili Inc. closed 7.8% and 3.4% lower, and American depositary receipts in both companies fell more than 9%. Hong Kong’s Hang Seng Tech Index retreated 1.5%

        The state-owned Economic Information Daily published a feature on Tuesday, saying excessive gaming could have ill effects on children and highlighting experts’ calls for tighter regulation.

        “Society has come to recognize the harm caused by online gaming and it is often referred to as ‘opium for the mind’ or ‘electronic drugs,’” the original article said. This line didn’t appear in the updated version. In both versions of the article, the newspaper said gaming addiction was on the rise, affecting children’s studies and causing alienation.

        The article cited interviewees as saying gaming platforms should be more socially responsible, rather than purely chasing profits. Regulatory penalties should be heavier, and companies should protect children by improving anti-addiction safeguards and content-review systems, experts cited by the paper suggested.

        Tencent said Tuesday it would introduce new rules, starting with its flagship “Honor of Kings” game, that will enforce tougher limits on playing time than required by the authorities. Young gamers will be limited to playing for an hour on weekdays and two hours on weekends and holidays, and children under 12 can’t make in-game purchases, it said.

        In recent months, China has intensified scrutiny of big technology companies over issues such as data security, monopolistic behavior and financial stability, sparking a steep selloff in the shares of companies like Tencent and Alibaba Group Holding Ltd. Drastic steps to curtail the after-school tutoring sector have also unnerved investors.


        • reply
          August 3, 2021 7:41 AM

          yup you know all those hand wringing about chinese gaming companies buying up all of western devs? don't worry, there's a bigger fish at play: the community party of china.

        • reply
          August 3, 2021 8:02 AM

          ‘Opium of the mind’ is an interesting statement…as opposed to what exactly? Reminds me of Krusty the Clown…’the Canyanero is the Cadillac of automobiles’.

          • reply
            August 3, 2021 9:01 AM

            Is it poorly translated version of opiate of the masses maybe?

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              August 3, 2021 11:23 AM

              opium of the mind is 100% on purpose.

              Xi means to invoke the opium disaster, trying to draw parallels to a previous time.

              The British empire forced opium sales on the former Chinese Imperial government, and when the Chinese said they don't want opium as an official import, the British+Western forces waged war on China for a few decades, and that resulted in Hong Kong, Maccau being ceded to Western forces.

              It's considered an example of Evil Western forces (and indeed British were Evil 100% - if the chinese people won't take opium and get addicted to opium the Brits would burn whole cities and pilage everything ... in modern terms it would be like Mexico force feeding heroine to the US) forcing things on China.

              It's an overwrought extension of an analogy, and pure manipulation, but that's what he's trying to do.

              • reply
                August 3, 2021 11:28 AM

                (meant to say Mexican cartels forcing heronine on US. in the imperial days, the British were no different from the Cartel in their brutality)

              • reply
                August 3, 2021 2:50 PM

                Thanks for posting this, had a vague notion of the opium wars before reading this.

          • reply
            August 3, 2021 11:30 AM

            https://www.shacknews.com/chatty?id=40771593#item_40771593

            wording is meant to draw parallels (for better or worse) to the 1st and 2nd Opium wars.

            it's pure manipulation for sure, but the wording is definitely on purpose and specifically written that way.

        • reply
          August 3, 2021 8:07 AM

          I actually do think that excessive gaming is harmful, although I'm a little mistrustful of what the Chinese government is doing here, too

      • reply
        August 3, 2021 7:24 AM

        part 2:

        One motivation for Beijing is to address social concerns, such as relieving the extreme pressures placed on children by the country’s highly competitive education system.

        Chinese authorities have previously raised concerns about the gaming habits of young people. In 2018, China stopped issuing videogame licenses for a period, costing Tencent more than $1 billion in lost sales and leading to a prolonged slump in its share price.

        Since then, Tencent has worked closely with the authorities that approve games in China, a role now filled by the National Press and Publication Administration. Earlier this month, Tencent launched a facial-recognition system to limit late-night gaming by children.

        The call for children to spend less time playing games online isn’t new, said Tam Tsz Wang, an analyst at DBS Bank. “But the market is linking it to the recent incidents, especially after what has happened to the education sector,” he added.

        Investors had typically viewed social concerns as posing less risk than competition or national-security issues, he said. But the tutoring clampdown shows that China now places a much higher priority than before on social issues, Mr. Tam added. Still, he said the aim was to protect minors, rather than killing an industry that is increasingly successful internationally.

        Tencent is an industry powerhouse and “Honor of Kings” was the world’s top-grossing game in both 2019 and 2020. For last year, the company reported the equivalent of $22.7 billion in revenue from smartphone games, and $6.9 billion from PC games, out of total revenue of $74.6 billion.

        Tencent’s gaming revenue rose 17% in the first quarter of this year, helped by “Honor of Kings” and newer games such as “Moonlight Blade Mobile.”

        Last week, a senior Communist Party official told an industry expo in Shanghai that preventing young people from becoming addicted to videogames was a top priority for authorities. “We will keep a close eye on it,” said Yang Fang, the deputy director of the publication bureau of the party’s central propaganda department.

        Ms. Yang said authorities had already taken action this year against games with violent, pornographic or otherwise undesirable content, and an industrywide initiative was under way to combat gaming addiction. In its statement Tuesday, Tencent said the new limits on playing time were part of the broader initiative.

    • reply
      August 3, 2021 9:15 AM

      rip wow gold farms

    • reply
      August 3, 2021 9:20 AM

      Sounds like the CCP's beak ain't getting wet enough

    • reply
      August 3, 2021 11:32 AM

      spiritual opium

      when a country is an out of touch demented geriatric relative

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