Chinese regulators have announced new restrictions on the release of new games in China, and on how much time its citizens should devote to playing games. This will have a significant impact on Tencent and other domestic publishers, several of which have significant investments in studios and franchises in the United States, Europe, and elsewhere.
China's government has in fact prohibited the release of new games for several months, but it's not until now that it's made its bigger picture public. While China's Ministry of Culture has been approving releases, a new agency called the State Administration of Radio and Television (SART) must also give its verdict, and it has been denying all applicants since March.
In its announcement, China's Ministry of Education cited the need to combat nearsightedness among the Chinese youth and to encourage more outdoor exercise and better nutrition. Parents are also instructed to monitor their children's use of electronic devices and to set specific limitations: "The use of electronic products for non-learning purposes should not exceed 15 minutes, and should not exceed 1 hour per day."
For reference, research firm BankMyCell reports that Americans spend an average of four hours per day on their mobile devices, across all age groups.
Tencent shares declined 4.6% in the wake of the announcement on Thursday. The sizeable international conglomerate is the distributor of PlayerUnknown's Battlegrounds, aka PUBG, which remains very popular in China despite the rise of Fortnite. But as CNN notes, the company has not been allowed to collect revenue from the game in China.
According to public filings, Tencent also owns 100% of Riot Games, the makers of League of Legends; 80 percent of Supercell, the makers of Clash of Clans and Clash Royale; 80 percent of Grinding Gear Games, the makers of Path of Exile; plus minority stakes in Activision Blizzard, Epic Games (the makers of Fortnite), Ubisoft, Paradox Interactive, and several other multinational game publishers and development studios.
Speaking to the Wall Street Journal, Jefferies equity analyst Karen Chan said, "This will likely accelerate market consolidation toward top developers and quality games at the expense of smaller players."
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Only a few weeks ago, Tencent announced the launch of an international competitor to Steam called WeGame, which would include many releases from the aforementioned game publishers and studios. It's not clear yet how the Chinese government's new declaration will impact this project.
According to China's regulators, "Allowing your child to spend more time in the open sun can effectively prevent and control myopia," and parents are encouraged to make sure that their children get at least 60 minutes of exercise per day.
Parents are also to "Encourage support for children to participate in various forms of sports activities, urge children to seriously complete the winter and summer sports, to master 1-2 sports skills, and guide children to develop lifelong exercise habits."
In this statement, the China's State Press and Publication Administration is tasked with restricting access to games, "Implementing the regulation of the total number of online games, controlling the number of online games...exploring the age-appropriate reminder system in line with national conditions, and adopting measures to limit the use time of minors."
- The Chinese government has announced new regulations on how much time children should spend playing video games and on how many video games can be released in China.
- The nation's regulators said the new guidance is intended to fight a rise in nearsightedness among Chinese youth, and to encourage more outdoor exercise and better nutrition.
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