Tencent Says China's New Rule Has No Fundamental Changes on Online Game Business after Shares Bloodbath

BEIJING, December 22 (TMTPost)—Tencent Holdings Limited tried to play down affect of the upcoming new online rule in China after stocks the world’s largest video game vendor crashed.

Credit：Visual China

The new draft regulation “does not fundamentally change key elements such as the business model and operation pace of the online gaming industry”, Vigo Zhang, or Zhang Wei, the Vice President of Tencent Games, told multiple media outlets at home and abroad on Friday. Zhang commented the new measures under the regulation clarify “the authorities’ support for the online gaming industry, providing instructive guidance encouraging the innovation of high quality games.” Regulators have released the new measures to seek comprehensive public comments, which is believed to be “more conducive to the orderly and healthy development of the gaming industry”, said Zhang, who commented t

Zhang vowed his division will continue to adhere to the strategy to develop quality games powered by technology innovation and culture as the guide. With the support of authorities, Tencent games will deliver a high-quality development for China's game industry, the executive said.

Despite Zhang’s remark, all the U.S.-listed shares of Chinese firms with gaming business turned red on Friday. The American depository receipts (ADRs) of NetEase tumbled as much as 22% and closed about 16% lower, Tencent ADRs settled 9.9% lower after a more than 10% decline intraday, and Bilibili ADRs dropped as much as 10% before down nearly 5% at close. Earlier that day, these companies’ shares listed in Hong Kong have already suffered a bloodbath. NetEase shares plunged 24.6% to close at HK$122.00, the lowest since February 2022. That is the biggest daily drop since NetEast listed there in June 2020, which wiped out HK$115.1 billion (US$14.7billion )off the firm’s market. Tencent shares settled at HK$274.00 with a decline of 12.4%, losing HK$367billion (US$47 billion) in market value. Bilibili shares slide 9.7% to close at HK$80.30, the lowest since November 2022. Friday also saw Netherland-listed shares of Prosus NV, Tencent’s largest shareholder, dived about 20% in the morning trade and settled 13.4% lower, the biggest daily loss in more than a year.

Such market bloodbath orignated from a draft regulation on online games management, issued by the National Press and Publication Administration (NPPA), and is now soliciting public opinion. The draft guidelines ask online publishers not to offer inducement rewards such as daily login rewards, first-time recharge rewards, or continuous recharge rewards. It also prohibit the publisher and operator of online games from providing high-priced game props trading through hype or auctions. All online games are required to set a limit on user recharge amounts, and provide pop-up warnings to remind users about irrational consumption behavior. The draft rules also highlight measures for protection of personal information and minors, such as setting caps on game spending of minors at various ages, and banning minors from giving tips during live-steaming online games. But the proposal about processing game approvals within 60 days is deemed as an improvement that is expected be welcomed by the industry.

The new regulation marks further tightening up regulation on the video games. In 2019, China restricted people under 18 to playing 90 minutes a day on weekdays and banned them from playing between 10 p.m. and 8 a.m. Two year later, Chinese authorities issued even harsher restrictions to fight internet addiction. Minors are allowed to play online games for only an hour a day and only on Fridays, weekends and public holidays. The same year 2021 saw game approvals were halted for eight months due to gaming addiction concerns. Game companies like Tencent then set up or strengthened “youth mode” settings on their apps for minors protection. They also launched features that limit use, control payments and display age-appropriate content. Tencent has been strictly implementing what the regulators required since the rules about minors protection introduced in 2021, Zhang Wei noted on Friday, adding that both the playtime and the in-game consumption of minors are at their historically low levels.

The new rule will change the operation mode of each phase of game publishing and operation, like game research, maintenance and promotion, a business insider told the state-backed newspaper the Global Times. Though the paper noted some industry people stated the proposals may be subject to adjustments since the current draft could only become a final one if the industry feedback is taken into account.