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What just happened? The Chinese government has never had the most positive view of video games, to say the least, but its latest criticism of online titles was so severe—branding them "electronic drugs"—it sent Tencent and NetEase shares falling more than 10%. It's also led to Tencent introducing restrictions for minors.
In an article on Tuesday, the state-run Economic Information Daily said many teenagers were now addicted to online games, and they were having a negative effect on the youngsters. It also called for more restrictions. The outlet is affiliated with China's biggest state-run news agency, Xinhua.
Tencent's hugely popular Honor of Kings was cited in the article. As of November 2020, it has over 100 million daily active players. The outlet writes that many users spend eight hours or more playing the game every day.
"No industry, no sport, can be allowed to develop in a way that will destroy a generation," it stated, comparing online games to "spiritual opium worth hundreds of billions."
Tencent's shares fell more than 10% in morning trade, wiping almost $60 billion from its market cap, writes Reuters. NetEase shares were down 15.7%, and game developer XD Inc and mobile gaming firm GMGE Technology Group Ltd also saw their shares plummet. China's video games market was worth $43.1 billion in 2020
Tencent in a social media post said it was introducing measures to cap the number of hours minors spend on Honor of Kings after "relevant authorities" requested greater protections for younger players and for companies to carry out their "societal responsibility." Additionally, those under 12 will be prohibited from in-game spending, and there will be more efforts to prevent minors from using adult accounts. The company said it plans to roll out the restrictions to all of its games eventually.
Image credit: pandaily.com