Tencent has ‘good news’ as Chinese regulator appears to soften proposed gaming rules – Times of India

Tencent has 'good news' as Chinese regulator appears to soften proposed gaming rules - Times of India

China has been cracking down on its gaming industry over the past few years. In 2021, the country imposed a curfew on video game players who are minors. Later, China’s cyberspace regulator mandated that children under the age of 18 be limited to a maximum of two hours per day on their smartphones. Just when players and gaming companies began to believe that China was finished with its new regulations for the games industry, regulators proposed new laws to curb the growth of gaming in the country.
Last week, China’s National Press and Publication Administration proposed new rules targeting in-game spending. The new law seeks to prevent the use of costs and rewards that encourage consumers to play video games regularly.
The proposed law largely affected the shares of Chinese gaming companies Tencent and Net Ease About $80 billion was reportedly briefly wiped from the valuations of two Chinese gaming companies, denting other companies operating in the Chinese market.
According to a new report from Reuters, Chinese officials have promised to improve the proposed rules, which have affected the stocks of video game companies. Following the latest news, Tencent Holdings Its shares also saw a partial recovery phase.
How China tries to relax proposed gaming rules
The report claims that China’s video game regulator has said it will improve the rules by “carefully studying” public opinion. The draft rules, which are open for public comment until January 24.

In a note to clients, Nomura Analysts wrote: “We believe these fire-fighting measures may help ease market concerns somewhat, but are not sufficient to address the overhang created by the draft regulation. “

The news helped Tencent shares rise 5% after falling 12% last week. Meanwhile, shares of Tencent rival NetEase also rose 10% after falling 25% over the same time period. For comparison, Tencent derives a fifth of its revenue from online gaming while NetEase derives 80% of its revenue from domestic online gaming.
NetEase recently negotiated a partnership with the developer of World of Warcraft. Snowstorm After the separation a year ago, the company’s Chinese subsidiary, Blizzard China shared a post earlier this month saying it was in talks with publishing partners in China to continue serving the game in the country.
In December, China’s video game regulator also approved new licenses for 105 domestic online games, more than the average month.

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