Tencent and game developers have suffered a sizeable drop in value this year due to the Chinese government’s decision to blanket ban the release of new video game titles until next year.
The Communist Party of China (CPC) took the decision last March after media regulation was moved fully under party control. Since the ban was implemented, game developers and companies like Tencent have taken a hit from investors. Earlier in the year, the company’s OTC shares hit a high of $61 (£46), but have since fallen to $36.46 (£27.80) – a drop of 40%.
The move has crippled an important revenue stream for Tencent, which has confused many analysts as the company is one of the largest in China – valued at around $350 billion (£267 billion).
Game Freeze Has Slashed The Number of Games Approved
The decision to prohibit the release of new games was prompted by reports that video games were having a direct detrimental affect on children, causing increasing levels of near-sightedness. In addition to the ban, Tencent was compelled to force players to use their real names when logging into Honour of Kings.
In July, the company was forced to start restricting game play time for users under the age of 12 to one hour per day, while players aged 13-18 have been limited to two hours per day.
The impact of the ban is already sending reverberations through the industry. This year, only 1,931 games have been approved in China, down from more than 9,000 last year.
Given that regulators have not even taken applications for approval, it is predicted that there will be a massive backlog once normal operations resume.