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Tencent sinks 11% after video game restrictions.  China compares industry to children's opium - markets

Tencent sinks 11% after video game restrictions. China compares industry to children’s opium – markets

Shares of giant Tencent posted their biggest intraday drop in a decade in the Hong Kong session on Tuesday after the company announced restrictions on access to video games for children under 12 in the wake of attacks by Chinese state-owned media that dubbed the sector ” Spiritual opium” and “electronic drug”.

The Chinese company’s announcement came after an article published in the newspaper The daily economic information of the state news agency Xinhua, which said video games have changed “In “a spiritual opium valued at hundreds of billions”, he warns that “no industry can develop a method to destroy a generation.”

The article was published Tuesday morning, Beijing time, and was deleted at the end of the day. The story is still available. In paper version (in Chinese). This post is seen as an initial attempt to shake the waters, before China begins to tighten its grip on these types of companies.

The paper did not directly mention Tencent, but attacked the spread of Internet addiction among young Chinese. Throughout the article, anonymous young men were quoted saying that some of their colleagues spend more than eight hours a day playing games.

Tencent changed the rules

“In the next step, there should be stricter controls on the amount of time that minors play online games. It should be significantly reduced from the current level,” the article says. Although it does not attack Tencent directly, what is certain is that the company did not wait another day to announce changes to its policy.

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At the end of the day, he warned that it would restrict minors to only one hour during weekends and no more than two hours during holidays. In addition, it plans to ban children under the age of 12 from purchasing games, and has also looked into the possibility of preventing this entire age group from having direct or indirect access to video games.

Last month, the company said it would force facial recognition on smartphones to see if it was an adult or a child playing, as well as requiring that registration be done using people’s real names and not “aliases” to have greater control.

The company’s shares lost nearly 11% in mid-fall, having finished the day with a 6.11% drop. But concerns spread to peers in Japan and South Korea, where shares of Nexon, with significant exposure to China, fell 10%.

In 2018, Beijing issued a warning about the video game industry and its impact on youth. A year later, in 2019, it rolled out a series of rules banning minors under the age of 18 from playing between 10pm and 8am, as well as limits on the amount of time they can play.

The video game market in China was valued at $43.1 billion in 2020, according to analysis and consulting firm Niko Partners.