Tencent and NetEase lose $ 60 billion due to Chinese rules

Bloomberg reports that the value of the largest game companies in China, Tencent and NetEase, fell dramatically in an overnight liquidation of shares, resulting in losses totaling over $ 60 billion between the two. To put that in perspective, that’s about eight times what Microsoft spent on Bethesda Softworks parent company Zenimax Media last fall and $ 15 billion more than Robloxinitial assessment of earlier this year.

Investors have apparently been frightened by China’s growing regulation of its video game industry. In addition to put restrictions on how long children under 18 can play games in the country, according to Chinese state media Xinhua News Agency says government officials met with industry leaders on Wednesday. During this meeting, officials asked them to avoid a “lonely focus” on profit, which, according to them, could lead to conceiving mechanics that promote dependence in minors.

“Authorities have ordered companies and platforms to tighten scrutiny of the content of their games,” Xinhua added. “Obscene and violent content and content that feeds unhealthy tendencies, such as the cult of money and effemicity, should be removed. “

South China Morning Post also notes that China is slow down licensing for new online games, which must be approved by government regulators before release. The National Press and Publications Administration of China, which manages these licenses, has yet to provide the list of titles approved for August, breaking with the tradition of promptly disclosing this information at the end of each. month.

state newspaper The Daily Economic Information (which, it turns out, is published by the aforementioned Xinhua News Agency) decried the effects of gambling on Chinese youth at the beginning of August, likening the hobby to “spiritual opium”. Much like developments today, these statements were seen as a reflection of the sentiments of the Chinese government and prompted investors to withdraw from the country’s burgeoning gaming industry for some time.

This volatility may be part of the reason why Tencent has so far spent much of 2021 investing (and sometimes completely buying out) foreign video game studios. The massive company recently acquired stakes of varying sizes in developers such as Klei Entertainment, Dontnod Entertainment, and Bohemia Interactive, and even made an offer of $ 1.3 billion for Sumo Group outside the UK.

“We believe in healthy play and take the physical and mental health of minors very seriously,” Tencent said. Bloomberg earlier today. “We appreciate the advice and guidance from relevant regulators, and will work hard to be in full compliance with all rules relating to youth gaming addiction and content regulation.”