China slashes children’s online play time: Tencent, NetEase shares drop

China slashes children's online play time: Tencent, NetEase shares drop

China’s National Administration of Press and Publications said minors would only be allowed to play online games for three hours a week. This is a significant drawback compared to the previous rules.

Zhang Peng | LightRocket | Getty Images

GUANGZHOU, China – Shares of Tencent and NetEase, two of China’s biggest gambling players, fell on Tuesday after regulators allowed children to play games in spectacular fashion.

But analysts expect the latest directive to have minimal impact on the Chinese gaming giant.

Shares of Tencent fell about 3.2% in morning trading while Hong Kong-listed shares of NetEase fell 3.5%.

China’s National Administration of Press and Publications said on Monday that children under the age of 18 would only be allowed to play online games for three hours a week and only at specific times.

The decision significantly reduced playing time for minors, who were allowed to play for most of the day to 90 minutes under the 2019 rules.

Gaming is the biggest source of revenue for NetEase and Tencent. But analysts don’t expect a huge impact on businesses because of the new rules.

Tencent previously said that only a small portion of the game’s revenue comes from young players in China.

“We estimate that around 5% of gaming revenue comes from minors under the age of 18, and we believe there is a revenue impact of around 3% on Tencent if we consider games to be the majority. of total income. contributes about 60%, ”investment bank Jefferies said in a note released Monday.

“Miners represent NetEase’s low gaming revenue figures,” analysts said.

The Chinese government has long been concerned about gambling addiction among the country’s youth. Content like games is also tightly controlled in China.

Tencent and NetEase have gone through gaming regulations in the past.

In 2018, regulators suspended the approval of new game versions for several months. Tencent and NetEase have already taken steps to limit the time young people play their games online.

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