Tencent & NetEase stocks slip on China's strictest anti-gaming measures yet

Both companies saw significant dips coming into Monday's market as China's government passed major restrictions on allowable game time.

41

China’s government has become one of the biggest threats to its own gaming giants by far. The continued effort to restrict playtime, game availability, and more have done financial harm to numerous companies in the video game and tech industries in China. However, the latest regulations from China’s government may be the hardest hitting yet to video game companies like Tencent and NetEase, and these restrictions appear to have caused stocks in both companies to take quite a tumble.

The Chinese government passed its newest regulations on gaming over the weekend, as reported early on August 30, 2021, by sources like video game analyst Daniel "ZhugeEX" Ahmad. According to the new regulations, minors in China are now restricted to one hour of playtime on Friday, Saturday, and Sunday, the strictest measures yet introduced in the country. Meant to curb gaming addiction, the new restrictions have had quite an effect on gaming publishers and developers like Tencent and NetEase, which make up two of the biggest forces in gaming in the country. Both also saw a significant dip in stock value on Monday, August 30, immediately following the news.

Tencent saw a lesser drop than NetEase, but still not an insignificant hit to its stock price coming into news of China's most strict gaming regulations on Monday, August 30.
Tencent saw a lesser drop than NetEase, but still not an insignificant hit to its stock price coming into news of China's most strict gaming regulations on Monday, August 30.

At first, NetEase saw the bigger dip in value, but it has climbed back a bit on news that it has recently reached “final negotiations” to poach Yakuza creator Toshihiro Nagoshi from a 32-year-long career at Sega.

NetEase saw a bigger dip than Tencent coming into news on Monday of China's most strict gaming regulations. It has, however, recovered a bit on news of Yakuza creator Toshihiro Nagoshi joining the company.
NetEase saw a bigger dip than Tencent coming into news on Monday of China's most strict gaming regulations. It has, however, recovered a bit on news of Yakuza creator Toshihiro Nagoshi joining the company.

Indeed, NetEase and Tencent may continue to turn their efforts beyond the borders of China and grow their influence in other nations, given the arguably ridiculous amount of regulation both companies are facing on their home turf. It's a matter that Tencent felt necessary to address directly in its recent quarterly reporting. Further measures are likely in the future for both companies as they seek to continue to grow despite government restrictions. Stay tuned as we continue to follow this story for further updates and information.

News Editor

TJ Denzer is a player with a passion for games that has dominated a lifetime. When he's not handing out beatdowns in the latest fighting games, exploring video game history, or playing through RPGs with his partner, he's searching for new food and drinks in the constant pursuit of good times with good people inside and outside the South Texas area. You can also find him on Twitter @JohnnyChugs.

From The Chatty
    • reply
      August 30, 2021 6:35 AM

      China moves to limit minors' video game time to only 3 hours a week, one hour a day on Friday, Saturday and Sunday. No weekday games otherwise. Not clear what the age cutoff is but expected to be 18 and younger.

      https://www.wsj.com/articles/china-sets-new-rules-for-youth-no-more-videogames-during-the-school-week-11630325781
      https://www.gamesindustry.biz/articles/2021-08-30-china-bans-minors-from-playing-games-during-the-week

      • reply
        August 30, 2021 6:40 AM

        That’s seriously fucked up. Also seems totally unenforceable. Even if they have stupid facial recognition or whatever the kids will just find a way to circumvent that with dummy heads or something.

      • reply
        August 30, 2021 6:42 AM

        I'm sure a bunch of bored kids won't cause any issues for the regime.

      • reply
        August 30, 2021 6:42 AM

        Yikes. You don’t even get to choose the hour you play. 8pm-9pm only. Wtf China.

        • reply
          August 30, 2021 7:16 AM

          Might be an attempt to make it easier to enforce.

          They probably got something involving the Chinese firewall for this kind of enforcement.

          Is arbitrary and very restrictive. We'll see how this plays out.

          • reply
            August 30, 2021 7:31 AM

            Theyll just make it part of selling stuff in China if a console or phone lets them play outside those hours you can’t sell it there. If Sony MS or N want to sell games and consoles they’ll have to comply.

            • reply
              August 30, 2021 7:35 AM

              Still doesn't change the fact that it's stupid and arbitrary.

              Eventually this might make it harder to sell games to people under the age of 18.

        • reply
          August 30, 2021 7:37 AM

          National Game Hour. It's patriotic and a great way to achieve cultural harmony.

        • reply
          August 30, 2021 7:58 AM

          It gets worse:

          "China has five time zones but follows a single standard time offset of UTC + 08:00"

          • reply
            August 30, 2021 10:15 AM

            this is the biggie. china is a juggernaut - the whole country operates on one time zone. giving out the leisure time rules and parameters helps china grow larger.

      • reply
        August 30, 2021 6:43 AM

        LOL good luck with that China.

      • reply
        August 30, 2021 7:07 AM

        Wait, what are they supposed to do for the other 109 waking hours per week?

      • reply
        August 30, 2021 7:09 AM

        That’s not gonna help NTDOY :-(

        • reply
          August 30, 2021 7:25 AM

          How will they track offline play?

          • reply
            August 30, 2021 7:29 AM

            Mandatory OS level feature?

            • reply
              August 30, 2021 8:24 AM

              I'm thinking it's more likely they'll have the parents do their part in enforcement.

              If they don't do their patriotic duty then they might be forced to re-educate somewhere along with their kids.

      • reply
        August 30, 2021 7:11 AM

        Is that the death warrant for Chinese esports?

        • reply
          August 30, 2021 7:14 AM

          Are they mostly minors? (I don't pay attention to esports.)

          • reply
            August 30, 2021 7:34 AM

            Probably not, but I suspect you've got to start putting in the hours at a young age to be any good and actually break into the scene.

            • reply
              August 30, 2021 7:49 AM

              I wouldn't be surprised if they had exceptions for eSports academy type things where they're training them for that specifically.

      • reply
        August 30, 2021 7:27 AM

        Wow, they finally figured out how to make PUBG free of hackers

        • reply
          August 30, 2021 7:37 AM

          Lots of people above the age of 18 still hacking.

          This will solve nothing. Might end up pissing off a lot of minors in China.

      • reply
        August 30, 2021 7:28 AM

        You want to start a revolution, China? Take away a bunch of nerds video games

        • reply
          August 30, 2021 7:33 AM

          Need to get on Etsy and market “Don’t tread on me” material with the silhouette of a game pad on a yellow flag. Or “come and take it” along with the silhouette of a controller and a star.

      • reply
        August 30, 2021 7:28 AM

        This is such a Chinese boomer move.

      • reply
        August 30, 2021 7:31 AM

        Totally something Winnie the pooh would do.

      • reply
        August 30, 2021 7:32 AM

        Frankly this is a great move and other countries should follow suit. There are no drawbacks.

      • reply
        August 30, 2021 7:35 AM

        That would amount to progressing 100 feet per week in a Dark Souls game for me.

      • reply
        August 30, 2021 7:43 AM

        Cool, China's forced limitations on personal decisions has never come back to bite them in the ass before

      • reply
        August 30, 2021 8:06 AM

        Just another brick in the wall, so to speak. Friends of mine play LoL, Arena of Valor, Honor of Kings, etc. for hours upon hours each day. They'll eat bans if they play too long, and there's a cooldown before they can join servers. Applying it to minors is just an escalation of an a system that's already in place for adults. ED thinks it's a good thing, and I although I kind of agree, it's just another restriction on people's lives here; passive social engineering by the CCP.

        I'm constantly thinking of an explanation for these authoritarian policies (in comparison to other conventional democracies) but this is just the way the CCP has decided to govern 1.4 billion humans. Overall, it's the onset of a dystopian hellscape but like...how else do you maintain control and avoid an absolute catastrophe? I'm not shilling here, and I'm definitely not a tankie, but it seems like the country's leadership is inevitably painting itself into a corner on the international stage to harness 18% of the global population.

        • reply
          August 30, 2021 8:11 AM

          Well there might be severe economic consequences of not allowing people to do what they want with their daily lives.

          Good example of this is the one child policy that China just recently revoked. They have an aging population that are not likely to consume.

          Eventually China might have to literally print money to keep this from being too much of a problem but it's definitely going to be a problem.

        • reply
          August 30, 2021 8:15 AM

          Another possible severe consequence of authoritarian governments is that people become less creative.

          North Korea decided to solve this problem by kidnapping musicians 😂 lol

          • reply
            August 30, 2021 8:22 AM

            Wait I just realized I meant people in the film industry in South Korea not musicians.

            I do know North Korea kidnap people pretty regularly.

            I'd provide specific examples but I just can't be bothered.

            • reply
              August 30, 2021 8:35 AM

              I know what you’re talking about. But to your point about stifling creativity: there are still creative endeavors here but they’re constrained by the state, and it runs deep. Most of what I have to say about it is anecdotal but with the folks I interact with, I notice it. Specifically with kids, the concept of ‘imagination’ is different than how I understood it growing up.

              • reply
                August 30, 2021 8:46 AM

                If I had to choose between living in an authoritarian government and one not quite so authoritarian I would choose the latter over the former.

                There are some advantages of an authoritarian government. Such just getting people vaccinated for covid-19. That vaccine product that they vaccinate with everybody with might not be Pfizer or Moderna. So the efficiency might not be all that great but everybody will be vaccinated.

                I'm mostly thinking of the Sputnik vaccine product in Russia as I type this up.

                But outside of that it would really suck to be living in some country you like China. Your quality of life might be good but you may be miserable because you don't get to choose how you live your life.

              • reply
                August 30, 2021 11:09 AM

                I guess what you're saying is that people in China or Russia are creative in different ways compared to people in America.

                Their imagination is different and there are problem solving approaches are different from American approaches.

        • reply
          August 30, 2021 9:14 AM

          ED was joking

      • reply
        August 30, 2021 8:07 AM

        Good luck with that...

      • reply
        August 30, 2021 8:17 AM

        So I guess the market for single player only games is about to explode.

      • reply
        August 30, 2021 9:10 AM

        China, particularly the central government, is very insecure and pushing that on everyone. Any chance they can leverage to show how they're better than others they'll take it.

        • reply
          August 30, 2021 9:23 AM

          Which eventually might backfire against the government of China in some colossal fashion.

          I'm thinking of some dystopian future where there's lots of jobs but nobody can accept them because they broke some law in China or they're just too old.

          • reply
            August 30, 2021 9:26 AM

            People don't just sit there if they're desperate. That's a situation the government would want to avoid at all costs. Specifically because they're right to be insecure.

            • reply
              August 30, 2021 10:39 AM

              True. We'll see how this works out for the government of China in the long run.

              • reply
                August 30, 2021 11:00 AM

                They just end of dead. That's how authoritarian regimes work. Disappeared randomly in the night.

                • reply
                  August 30, 2021 11:02 AM

                  There's a limit to how much you can do that before that action also ends up being destabilizing and causes people to remove you.

                  They have a very real tightrope to walk, the way they like to operate.

      • reply
        August 30, 2021 9:17 AM

        How do folks think this will impact the industry?

        Right now, China has a massive amount of pull in certain parts of the gaming industry. Could laws like this reduce demand and sales of games, and subsequently reduce the amount of influence China has on game development?

      • reply
        August 30, 2021 9:24 AM

        Just for reference

        that's roughly 150 million potential customers (~10-18). Half the population of the USA.

        Wonder how much of an economic impact it'll have on western companies with chinese branches of their games

        • reply
          August 30, 2021 9:38 AM

          Doubtful. China already had limits on spending by minors for a few years.

      • reply
        August 30, 2021 9:27 AM

        Would have been a better idea to limit smart phones and social media to youth until 10th grade.

      • reply
        August 30, 2021 9:47 AM

        In a shocking development, Ubisoft announced that the next assassin’s creed game will have a play time of 56 minutes.

      • reply
        August 30, 2021 10:11 AM

        I have had some incredible memories with my boys during game time. No way I'd give that up.

      • reply
        August 30, 2021 10:54 AM

        That's absolutely insane

      • reply
        August 30, 2021 10:57 AM

        Gonna have to buy games with physics copies and start underground lan parties. Oh wait…

      • reply
        August 30, 2021 11:00 AM

        punishment is death!!! play too much video games as a kid and you won't pass on the genes.

      • reply
        August 30, 2021 11:01 AM

        Hey kid. Wanna buy some ROMs?

      • reply
        August 30, 2021 12:12 PM

        Still mad that GOG pulled Devotion.

      • reply
        August 30, 2021 12:29 PM

        In other news, single player, offline modes are about to get hugely popular in China.

      • reply
        August 30, 2021 12:31 PM

        SWEET! Less cheaters across tons of games.

      • reply
        August 30, 2021 12:35 PM

        Man, the Chinese government sucks so much.

Hello, Meet Lola