Video game companies see stock prices plummet, following stringent government regulation
Published: Aug 31, 2021 02:58 PM
Tencent Games exhibition zone at China International Fair for Trade in Service in Beijing on September 9th, 2020. Photo: VCG

Tencent Games exhibition zone at China International Fair for Trade in Service in Beijing on September 9th, 2020. Photo: VCG

Video game stocks opened weaker on Tuesday after Chinese regulators ordered internet gaming companies to limit services to minors on Monday, as multiple online gaming companies publicly announced plans to comply with new rules targeting gaming addiction of minors. 

The stocks closed mostly lower on Tuesday but Tencent Holdings closed slightly up after seeing a steep decline in the morning session.

Tencent Holdings Ltd closed at HK$ 481.20 ($74.47) per share on Tuesday, up 3.31 percent while NetEase Inc closed at HK$ 141.70 down 2.07 percent. 

The game stocks in the A-share market had not seen significant movement when trading closed up on Tuesday. . 

Earlier today, Tencent Holdings Ltd dropped 1.46 percent to HK$ 459 per share while NetEase Inc was down 3.46 percent to HK$139.70.

In the A-share market, Perfect World Co Ltd went down 1.47 percent to 13.40 yuan per share ($2.07), Wuhu 37 Interactive Entertainment Network Technology Group Co gained 4.80 percent to 17.03 yuan and Yoozoo Games was down 3.11 percent to 12.15 yuan.

Prices of most US-listed Chinese game stocks fell on Monday with NetEase Inc dropping 3.39 percent to $89.62, HUYA Inc down 3.66 percent to $9.99, and Bilibili Inc fell 1.59 percent to $74.13, but DouYu International Holdings rising 1.32 percent to $3.83. 

Xiaomi Game, a mobile game download tool launched by China's tech company Xiaomi, announced on Monday that the platform will finalize arrangements for an anti-addition system for minors on Wednesday, implement the requirement of real-name registration and log-ins.

Zhejiang Jinke Tom Culture Industry Co, which has an Intellectual Property (IP) ecological operation with 'Talking Tom and Friends' as its core IP, said on Tuesday that the company attaches great importance to the protection of minors and firmly supports government regulation of preventing minors from getting addicted to online games.

Tencent Holdings, NetEase and other major game companies are ramping up efforts to reduce minors' access to video games. The impact of the new regulations on the revenue of the two companies could be controlled and minimized, financial information portal reported on Monday, citing a report released by the Citigroup. 

However, the report also indicated that the implementation of new rules may cause investors to lower their expectations for future growth of online games.

China's National Press and Publication Administration, the country's media regulator, on Monday ordered internet gaming companies to provide no more than one hour of gaming service to minors from 8-9 pm on Fridays, weekends and official holidays, which is the nation's strictest requirement yet aimed at preventing gaming addition among minors. 

Major online gaming platforms including Tencent and NetEase responded on Monday saying they would strictly abide by the new government regulation.  

Global Times