China prohibits youngsters from enjoying on-line video games for greater than three hours every week

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Children and teenagers under the age of 18 are only allowed to play online video games for up to three hours a week in China, according to the new rules published Monday by China’s National Press and Publication Administration.

The move is a new blow to the country’s gaming giants from Tencent to NetEase, who are grappling with an onslaught of regulations spanning everything from antimonopoly to privacy this year. This has scared investors and has hurt the value of Chinese technology stocks.

According to a translated notice on the new rules, people under the age of 18 will be allowed to play video games for one hour a day between 8 p.m. and 9 p.m. on weekends and public holidays. The agency has billed the rules to protect children’s physical and mental health.

There are over 110 million minors playing video games in China today, and we expect the new limits will result in a decrease in the number of players …

Daniel Ahmad |

Niko partner

The rules apply to companies that offer minors online game services and limit their ability to serve these users outside of the specified hours. The companies are also not allowed to offer any services to users who have not signed in with real name registration in order to prevent them from knowing the background of their users.

The latest NPPA rules significantly reduce the amount of time minors can play online games. Under the 2019 rules, people under the age of 18 were allowed to play games for 1½ hours a day on most days.

“Today, over 110 million minors play video games in China, and we expect the new limits will lead to a decrease in the number of players and a reduction in the time and money spent on games by those under the age of 18.” That said Niko Partners Senior Analyst Daniel Ahmad.

“However, we do not expect the decline in spending to have a material material impact on gaming companies’ bottom line as the time restrictions and underage spending have been in place for two years, so we expect a milder impact.” on overall growth rates as spending among minors was already low. “

Tencent previously said that only a small portion of gaming revenue comes from younger gamers in China. In the second quarter, 2.6% of gross gaming revenue in China came from players under the age of 16.

The US-listed shares of NetEase, one of China’s gaming giants, fell 4% on Monday.

Read more about China from CNBC Pro

Tencent said in a statement that it will implement the new requirements and support the new rules. The Chinese gambling giant has taken steps in the past few months to forestall regulators. In July, Tencent introduced an obligation for gamers to do a facial recognition scan on their phone to see if they are an adult.

NetEase was not immediately available for comment when contacted by CNBC.

Beijing has long been concerned about gambling addiction among the country’s youth. Game consoles were banned for around 14 years until 2014. And a government publication this month ran an article branding online games as “opium” and calling for further restrictions. The article was removed and later republished with a new heading and references to “Opium” removed. However, there were concerns among investors that further gaming restrictions might come.

This month, Tencent warned it expected further regulation but was confident it could be compliant.

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