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

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China’s National Press and Publishing Administration said minors would only be allowed to play online games for up to three hours a week. This is a significant reduction from the previous rules.

Zhang Peng | LightRocket | Getty Images

GUANGZHOU, China – Actions of the two biggest gambling players in China Tencent and NetEase fell on Tuesday after regulators drastically slashed the time children were allowed to play games.

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

Tencent shares were down about 3.2% in morning trading while NetEase’s Hong Kong-listed shares fell 3.5%.

On Monday, China’s National Press and Publishing Administration said children under the age of 18 would only be allowed to play online games. up to three hours per week and only at specific times.

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

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 gaming 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 around 3% profit impact for Tencent if we assume the game contributes around 60%. % of total revenue, ”investment bank Jefferies said in a published memo. Monday.

“Miners represent a low number of NetEase gaming revenue,” analysts added.

For a long time, the Chinese government has been concerned about gambling addiction among the country’s youth. Content such as games is also tightly controlled in China.

Tencent and NetEase have gone through periods of gaming regulation before.

In 2018, regulators have frozen approvals for the new game released for several months. Tencent and NetEase have already taken steps to restrict the length of time young people play their games online.

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