The new draft regulation released by China to curb video gaming has triggered a significant market reaction, causing a massive decline in shares for some of China's largest gaming companies.
Tencent Holdings, the leading gaming firm, saw a staggering $46 billion reduction in its market capitalization as Beijing introduced draft regulations aimed at restricting players' spending.
The National Press and Publication Administration, China's gaming regulator, issued the draft rules, which mandate limits on account recharging for all online games. These rules also require pop-up alerts to caution users about excessive or irrational spending.
The regulator highlighted the goal to fortify industry standards and promote sustainable, high-quality development through the proposed 'Online Game Management Measures,' soliciting public opinions on the draft.
Among the proposed measures, developers would need to cap the amount players can spend within the game. Additionally, incentives like daily sign-in rewards and significant tips to game streamers would be prohibited.
This latest move follows Beijing's earlier action in 2021, which restricted online gaming for individuals under 18 to one hour on Fridays, weekends, and holidays.
China holds the position of the world's largest gaming market, with Tencent leading the global gaming sector in revenue. In response to these regulatory changes, Tencent Games' vice president, Vigo Zhang, affirmed the company's commitment to strictly adhere to any new regulatory requirements.
The impact of these developments wasn't limited to Tencent; another major Chinese gaming company, NetEase, experienced a substantial decline of over 24% in its shares. Additionally, Dutch tech investor Prosus witnessed a decrease of more than 14% in its shares following the news.
(With Agency Inputs)
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