Tencent Shares Drop By 11% After Chinese Media Calls Online Gaming “Spiritual Opium”
Many other companies have taken a considerable fall
When it comes to regulatory policies, no one can overcome Tencent. In recent months, the Chinese gaming giant has forced a bunch of restrictions on its games to counter the increasing addiction of video games among minors. Tencent is well-known for its overwhelmingly successful mobile game, PUBG MOBILE, and its shares in other renowned companies, such as Epic Games. However, the business has also been under fire recently.
From placing unusual restrictions on their games to accusations of censorship and surveillance, Tencent is almost always the talk of the town. Now, however, a spell of misfortune has struck the big fishes of China. According to a report by Bloomberg, Tencent shares dropped down to 11% after the Chinese media called online gaming “spiritual opium” in response to the new restrictions imposed by the company to regulate how long minors can play their online games. Not only Tencent but NetEase and China XD have also taken a considerable nosedive.
In March 2019, Tencent banned players under the age of 13 years from playing its online game, PUBG MOBILE. Later that month, many players in India reported receiving a “health reminder” which restricted them from playing the game for a certain duration of time after 6 hours of continuous playing. In China, the restrictions became much more strict after the Chinese government made it illegal for minors to play video games between 10 P.M. and 8:00 A.M. or for more than 90 minutes on a weekday. After this, Tencent introduced a facial recognition system called “midnight patrol” in July of this year to catch minors secretly playing the game without consent.
Recently, the company has come under criticism again after the Chinese media associated the widespread online gaming addiction in China with drug addiction, calling it “spiritual opium”. This was said in response to the new restrictions that Tencent had to introduce to their online games after the “relevant authorities” demanded more safety for minors in gaming and for companies to carry out their “societal responsibility”. As a result, shares for Tencent — whose online gaming business alone generated more than ¥39.1 billion (or $6 billion) in the first quarter — dropped by 10.8% (almost 11%) in Hong Kong. Since then, the company’s market value has fallen by $400 billion in comparison to its highest in January 2021.
For now, Tencent’s new restrictions will only apply to its flagship title, Honor of Kings, and will decrease the duration that minors are allowed to play the game even further. On business days, minors will be allowed to play for only 1 hour now (1.5 hours previously) and for 2 hours on holidays (3 hours previously). Additionally, the company has forbidden any minor under the age of 12 years from playing the game and ban minors from playing on adult accounts. The company has also brought forward three proposals for the entire gaming industry, calling for a complete ban on minors under the age of 12 years, to overcome the increasing online gaming addiction.
Tencent has already received criticism from big technology companies over the unusual and strict regulatory actions forced onto its online services. Just last month, the company was banned from the use of exclusive copyright agreements and fined for unfair market customs. In September 2020, PUBG completely cut ties with Tencent in India over concerns of privacy after the Indian government banned 118 Chinese applications. It seems like the company’s notoriety continues to be tarnished and it has done little to change that.
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