Game industry update

Xie Xiaoming is a typical Tencent customer. The 31-year-old telecom executive spends about 8 hours a week playing the two largest video games the company supports: League of Legends and PlayerUnknown’s Battlegrounds.

“It relaxes me,” said Xie from Anhui Province in southern China, adding that he started playing computer games at the age of 16.

“Playing games is a way to socialize with old friends. When I don’t want to go out, being alone is a very enjoyable time.” His partner disagreed, but Xie spent about 200 yuan on in-game purchases per month ( US$31).

But under the new rules that prohibit Chinese children from playing games for more than three hours a week, he may never become a Tencent customer.

this Policy issued in late August, Calling on game companies to restrict people under the age of 18 from playing games on Fridays, Saturdays, and Sundays or public holidays between 8pm and 9pm. Chinese official media said the move was aimed at protecting the physical and mental health of minors.

The announcement is the latest in a series of regulatory measures aimed at the technology industry, evaporating billions of dollars in the market value of Tencent and its rival NetEase. Online games account for less than one-third of Tencent’s revenue.

Both companies insisted that they would not be severely affected and welcomed the restrictions. “In the past few years, we have noticed that there are certain games in the industry that have a negative impact on children… So we believe that new requirements and new regulations will keep young people away from games as much as possible,” Netease founder William Ding said. Speaking on the earnings call earlier in the week.

They pointed out that only a small part of their gaming revenue comes from minors, and that their stock has rebounded in recent days. But analysts worry that these rules will squeeze the channels of future gamers, who often develop this habit in childhood.

Lightstream Research analyst Mio Kato, who published an article on the SmartKarma platform, said that investors “on the surface look at the low single-digit income contribution percentage of minors”, but should be concerned about “very significant downside risks to long-term earnings.”

“If you start a sport at the age of 10 or 12, then you are more likely to continue to engage in the sport during your lifetime,” Kato said. “If you are only allowed to play for three hours, many people will choose not to play, so your lifetime value will be greatly reduced… This is a big risk. No one of you is playing these games.”

Cai Rongjun, a 31-year-old doctoral student in Beijing, started playing video games at the age of 13, and now plays Tencent’s “Glory of the King” for about 2 hours a day, at a cost of 2,000 yuan. “I first played it to communicate with classmates and friends, and then you bought the skin [costumes and accessories for players’ avatars bought inside the game] And the task, you start to become addicted to it,” he said.

A 2013 American study on the history of video games for adult gamers found: “Video games seem to reach their peak early in life… in late adolescence rather than adulthood”.

But other analysts said that other regulations, including government restrictions and company-imposed regulations, have been implemented for child gamers for a long time, so the new regulations will not have a significant impact on revenue.

In 2019, China restricts children from playing games for 1.5 hours a day, and the holiday limit is 3 hours. Tencent subsequently vowed to prevent young children from spending money on games and introduced facial recognition technology to prevent minors from escaping control.

Using Tencent and its competitors’ streaming services, children may also increase the time they spend watching other people’s online games. Niko Partners, an Asian game market research company, stated in a report: “Minors who comply with the game time limit may use streaming video to fill their free time, even more than they do now.” “For minors. , The time of streaming video has been restricted, but it has not been restricted like the new game rules.”

The two companies still have an enviable user base.Although there are approximately 110 million minors playing video games in China, most of China 720 million players Over 18 years old. According to a survey of 4,500 respondents in March by game market data provider Newzoo, 18% of gamers in the country are under 18 years of age.

Some children may also violate the rules, possibly by using a virtual private network (VPN) to access foreign gaming websites. “Young gamers can bypass the new rules by logging into global servers via VPN [to] Avoid time constraints,” Niko Partners said.

A 16-year-old player of Honor of Kings in Henan Province said that he has already used his eldest brother’s account to play. When the new policy comes, he will spend more time playing his eldest brother’s account. “[The new regulation] It’s all because parents just hate games,” he said.

Supplementary report by Liu Nian in Beijing

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