Tencent collapses as China calls online gambling ‘opium for the mind’
Tencent Holdings shares Ltd.
and its rivals fell on Tuesday after a Chinese state-owned newspaper criticized online games as “opium for the mind,” fueling investor fears that the companies’ popular games could be dragged into. broader regulatory repression.
Hours later, however, the story was no longer accessible on the newspaper’s website and stocks recovered lost ground. Meanwhile, Tencent said it will introduce tighter restrictions on young users.
Shares of Tencent, which had fallen more than 10% earlier in the session, trimmed some losses to trade down about 6.3% by mid-afternoon in Hong Kong. NetEase peers Inc.
and bilibili Inc.
also regained lost ground, trading at around 9.5% and 5.2% respectively, while the city’s Hang Seng technology index fell 1.3%.
The state-owned Economic Information Daily published an article on Tuesday, saying excessive gambling could have harmful effects on children and highlighting calls from experts for tighter regulation.
“Society has come to recognize the damage done by online games and they are often referred to as ‘opium for the mind’ or ‘electronic drugs’,” the newspaper said. He said gambling addiction was on the rise, affecting children’s education and causing alienation.
The article quoted interviewees as saying that gaming platforms should be more socially responsible, rather than just chasing profits. Regulatory penalties should be increased and companies should protect children by improving anti-addiction safeguards and content review systems, the experts cited by the document suggested.
Tencent announced on Tuesday that it will introduce new rules, starting with its flagship game “Honor of Kings”, which will impose more stringent game time limits than those required by authorities. Young players will be limited to playing for one hour on weekdays and two hours on weekends and holidays, and children under 12 cannot make in-game purchases, he said.
In recent months, China has stepped up scrutiny by big tech companies on issues such as data security, monopoly behavior and financial stability, causing shares of companies like Tencent and Alibaba Group Holding to drop sharply. Ltd.
Drastic measures to reduce the after-school tutoring industry have also pissed off investors.
One of Beijing’s motivations is to respond to social concerns, such as relieving the extreme pressures placed on children by the country’s highly competitive education system.
The Chinese authorities have already expressed their concerns about the gambling habits of young people. In 2018, China stopped issuing video game licenses for a period, costing Tencent more than $ 1 billion in lost sales and leading to a prolonged decline in its share price.
Since then, Tencent has worked closely with the authorities that approve the games in China, a role now fulfilled by the National Press and Publications Administration. Earlier this month, Tencent launched a facial recognition system to limit children’s nighttime play.
Tencent is an industry powerhouse and âHonor of Kingsâ was the world’s highest grossing game in 2019 and 2020 with total revenues of $ 74.6 billion.
Tencent’s gaming revenue grew 17% in the first quarter of this year, helped by âHonor of Kingsâ and newer games such as âMoonlight Blade Mobileâ.
Last week, a senior Communist Party official told an industry exhibition in Shanghai that preventing young people from becoming addicted to video games was a top priority for authorities. “We will keep a close eye on it,” said Yang Fang, deputy director of the publications office of the party’s central propaganda department.
Ms. Yang said authorities have already taken action this year against games with violent, pornographic or other unwanted content, and that an industry-wide initiative is underway to tackle gambling addiction. In its statement on Tuesday, Tencent said the new playing time limits were part of a larger initiative.
âKeith Zhai contributed to this article.
Corrections and amplifications
The National Administration of Press and Publications approves video games in China. An earlier version of this article incorrectly referred to a previous organization, the State Administration of Press, Publishing, Radio, Film and Television. (Corrected August 3)
Write to Chong Koh Ping at [email protected]
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