Shares of video game companies including Tencent and NetEase fell on Tuesday after Chinese state media said online games are “poisoning” teens and comparing them to “spiritual opium” and ” electronic drugs”.
The article, published by Economic News Dailyaffiliate Xinhuacalled for tighter controls on the time minors can spend on games.
Share prices of Hong Kong-listed gaming companies plunged in early trading on Tuesday. The world’s largest video game company, Tencent, fell 10% while its competitor NetEase fell 13%. China Mobile Games and Entertainment Group fell 20% and games and video company Bilibili fell 14%. The broad selloff reflects investor concerns that the article was a signal from the state for a broader regulatory crackdown on the gambling industry.
The web version of the article by Economic News Daily was withdrawn on Tuesday afternoon, but its printed version remains in circulation.
As its share price plunged, Tencent pledged to implement stricter limitations for underage players than required by law. He pledged to ban children under 12 from making in-game purchases and called on the entire industry to ban children in that age range from accessing video games. Tencent will also crack down on minors who pose as adults to gain access to longer hours for games.
Over the past few months, the Chinese government has waged a series of campaigns to regulate online gambling and the education industry.
On July 24, the central government issued a notice with instructions to be carried out by the Ministry of Education. The text mentions that students must be guided to use electronic products in a reasonable way, with a limited time of use of these devices to prevent Internet addiction.
Last month, the government banned for-profit tutoring in core school subjects, a move that wiped billions of dollars off the market value of publicly traded education companies in Hong Kong and New York.
Read it: Tencent suspends new user registration for WeChat as tech crackdown shows no signs of stopping