Beijing says the new rules were necessary to stop the addiction to what it previously described as ‘spiritual opium’.
China’s new rules banning children under the age of 18 from playing video games for more than three hours a week have beaten shares in Tencent Holdings Ltd and other gambling companies, while young players have taken to social media to express their anger.
Beijing has said the new rules are needed to stop the addiction to what it once described as ‘spiritual opium’. The People’s Daily, the official newspaper of the ruling Communist Party, said in an article on Monday after the rules were announced that the government should be ‘ruthless’.
According to the new rules, gaming platforms can only offer services to minors on Fridays, weekends and public holidays from 20:00 to 21:00, according to the state news agency Xinhua, which quoted an release by the National Press and Publication Administration. China previously limited the playing hours for teens in 2019 to 1.5 hours per day.
It is ‘indisputable’ that commitment to online games affects the normal study life and the physical and mental health of teenagers, the People’s Daily article said. “Destroying a teenager will destroy a family.”
However, young Chinese players were angry.
‘Have you ever played a game with this group of grandparents who make these rules and regulations? Do you understand that the best age for e-sports players is in their teens? “A comment on China’s Twitter-like Weibo said.
‘Sexual consent at 14, at 16, you can go to work, but you have to be 18 to play games. This is really a joke. “
The impact on gambling stocks has been relatively measured, according to analysts who say that children generally do not generate much income for gambling companies, although they have noticed that the implications for the long-term growth of the industry have been much worse.
“The root of the problem here is not the immediate impact of revenue,” says Mio Kato, an analyst who publishes on SmartKarma. ‘The problem is that this step destroys the whole habit-forming nature of games at an early age.
Shares in Tencent, the world’s largest gambling firm by revenue, fell 3.6% in trading on Tuesday. The share has lost nearly 5 percent since the state media article describing gambling as mental opium was published on August 3rd.
Jefferies analysts said Monday that they will have about a 3 percent impact on Tencent’s earnings from the new rules, assuming gambling contributes about 60 percent of its total revenue.
The US-listed NetEase fell 3.4 percent on Tuesday in its similarly traded Hong Kong shares.
Krafton Inc, a South Korean company that earns fees by providing services for a game similar to its blockbuster PlayerUnknown’s Battlegrounds (PUBG) to Tencent in China, fell 3.4 percent.
Tokyo-listed Nexon and Cow Tecmo, both of which have exposure to the Chinese market, fell 4.8 percent and 3.7 percent, respectively.