China Discloses Resolving Children's Video Gaming Addiction, But Uncertainty Still Looms For Tencent and NetEase

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  • China’s top gaming industry association declared resolving the problem of children’s video gaming addiction in a report co-authored by Beijing-based research body CNG, the Financial Times reports.
  • China’s Game Industry Group Committee reported that 70% of minors played less than three hours of games a week.
  • Beijing, in August 2021, restricted children to only playing online video games after state media highlighted the mental and physical health toll gaming addiction was having on China’s youth.
  • Also Read: Activision And NetEase To Take Revenue Hit As They Fail To Renew 14-Year Old Deal In China
  • The time spent by children on Chinese internet giant Tencent Holding Ltd’s TCEHY games has plummeted since the regulation change and was down 92% in the third quarter compared with the same period last year.
  • In September, Tencent won its first license for a new gaming title since June 2021
  • “From the start of next year, we expect to see gradual and more regular approval of gaming licenses,” said Cui Chenyu, a gaming analyst at Omdia. 
  • “The total number of games receiving approval will be lower than before the policy change,” she said. “Foreign games will face stricter censorship than before.”
  • Tencent and Chinese gaming company NetEase Inc NTES have pivoted to focus on international expansion following curtailing of minors’ gaming time
  • In recent months, both have invested in foreign game publishing houses.
  • Cui noted the two groups were also seeking to “leverage their gaming technology” and “cash flow from gaming” to develop metaverse-related technology such as virtual-reality glasses and cloud services. 
  • “This is in line with the government policy. It’s a new direction. We don’t know how it will impact financial results,” she added.
  • Price Action: NTES shares traded lower by 1.22% at $65.47 on the last check Tuesday.
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