Tencent fuels 10% after Chinese language media labeled on-line video games “opium” as regulatory considerations mount

A Tencent logo is seen during the World Internet Conference (WIC) in Wuzhen, Zhejiang Province, China on November 23, 2020.

Aly song | Reuters

GUANGZHOU, China – Tencent and NetEase stocks fell on Tuesday after Chinese state media branded online games as “opium” and compared them to a drug.

The article also called for further industry restrictions to prevent addiction and other negative effects on children.

However, the article was deleted a few hours after it was published.

Tencent shares fell around 10% in the morning, while NetEase in Hong Kong was down nearly 14%. The stocks reduced losses later in the day but were still significantly lower. Tencent is one of the world’s largest game companies responsible for top-class games such as Honor of Kings.

NetEase declined to comment. Tencent was not immediately available for comment.

The article by Economic Information Daily, a state-owned Chinese publication affiliated with the official Xinhua newspaper, said online gambling addiction is “widespread” among children and could adversely affect their growth.

The article states that in 2020, more than half of Chinese children were nearsighted and online gaming is affecting their education.

The feeling in the article is not that new. The Chinese government has long been concerned about the effects of video games on minors.

In 2018, Beijing froze new approvals for games over fears that games could affect young people’s eyesight. In China, online games require regulatory approvals.

In 2019, China introduced rules prohibiting people under the age of 18 from playing online games between 10:00 p.m. and 8:00 a.m. and restricting the time they could play.

“The article drew attention to gambling addiction among minors. He recalls previous articles that compared video games to digital heroin, ”said Daniel Ahmad, senior analyst at Niko Partners.

“The timing of the article has raised investor concern about the recent crackdown on technology companies and the education / tutoring sector.”

The article also called for more control over the time children play games and more rigorous scrutiny of the content of games in order to reduce the amount of “false” information shown to minors.

“For the next step, there should be stricter controls over how long minors play online games. It should be reduced by a large amount compared to the current state, ”says the article, according to a CNBC translation.

Both NetEase and Tencent have implemented measures to protect young gamers, including registering real names to play games. Last month Tencent introduced a facial recognition feature on smartphones to check if the player is an adult.

Ahmad noted that most of the revenue generated in China is from players who are 18 years of age or older.

“If further measures are taken to prevent young people from becoming addicted to gambling, it will not prevent revenue-generating gamblers from gambling,” said Ahmad.

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