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Tencent and Chinese gaming rival Shudder as government tightens grip

The crackdown expected to freeze new game releases was announced by the Department of Education on Thursday as part of the Plan to Combat Vision Problems in Children and Adolescents.

It is said the authorities will "implement the regulation of the total number of online games, control the number of new online games, study the age-appropriate reminder system in accordance with national conditions and measures to limit the life of minors." [19659003Tencent'sstakeevenjumped77%Fridaymorningto$330HongKongdollarsNetEase'sUSDepositaryReceiptsTencent'slargestChinesegamingrivalfell72%to$19439onThursday

Chinese regulators have not approved the sale of new titles since March, nor has the sale of special features within games sanctioned the primary source of revenue for those who can download for free.

The freeze has led Tencent, China's largest gambling company, to $ 1

.5 billion in sales in the second quarter, analysts say.

Tencent once blamed the blockade for a bureaucratic reorganization of ministries that censor content. But industry experts said the freeze showed that Chinese authorities were preparing to take a harder line on offensive content and limited playtime.

"It's definitely being investigated more closely," said Joost van Dreunen, director of SuperData Research Inc. "Of course, it has prompted the Chinese government or regulators to say," We need to button that a little more, we have to have more control over it. & # 39;

China has zoomed past the US and Japan to become the world's largest video game market. Its nearly 620 million players are expected to spend $ 37.9 billion this year, compared to 446 million players who spent $ 22.2 billion in 2015, according to research institute Newzoo.

The growth was driven by games that can be downloaded for free. Tencent has benefited from the trend, but its profits depend on players buying additional weapons and costumes for their online avatars.

"The more money they make, the more they make it out of video games," said technology consultant and author Matthew Brennan. "There is a divergence of interest between [Tencent and] the government, which regards video games in many ways as something detrimental to the youth of the country."

Chinese regulators lack the resources to thoroughly review each game so they expect companies to monitor their own content. But you can also penetrate to block the distribution.

That's what happened to Tencent's Monster Hunter: World, where players hunt and kill exotic fantasy creatures. It was released for release before the blackout. When the game came out in August, regulators revoked their operating permit within days, citing "a large number of complaints," Tencent said.

"It was a public embarrassment," said Charlie Dai, an analyst at 86 Research. He believes that China will soon strengthen the enforcement of content standards.

Tencent did not respond to requests for comment.

The Ministry of Education said that the Directorate-General for Press and Publishing would be responsible for implementing new mandates [19659003] The drumming of video games has been getting louder for more than a year. Tencent came under fire in 2017 for its "Honor of Kings" mobile game, which the state daily People's Daily considered so addictive that schoolchildren skipped homework to play late into the night.

Tao Hongkai, a professor at Huazhong Normal University Most Chinese youth grew up during the recently abandoned one-child policy and have no siblings to play with. He said that makes the solo pursuit of video games particularly enticing. The parental pressure to shine at school meant that there was little time for healthier but more time-consuming hobbies such as sports and music.

"The problem is bigger now," he said, referring to the growing number of players and games. "The government is beginning to be attentive."

The Chinese authorities have also recently taken a series of actions against offensive video and news sites, and a popular humor app had to close.

Dollar losses were relatively small in these cases. Video games are much more at stake.

"Every month they can not monetize these games, they bleed money," said Tom Wijman, a senior market analyst in Newzoo.

Write to Shan Li at [email protected]

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