Tencent: After strong results for the third quarter, the crackdown on gaming in China has reached its revenue

Tencent Holdings (TCEHY) on Wednesday released higher-than-expected third-quarter results, but Chinese authorities' crackdown on the length of time kids can play video games in the world's largest market has hit revenue in the first quarter. one of the key sectors of the group.

According to Tecent, non-GAAP earnings were 2.061 yuan per share, up 15 percent from the same period last year and FactSet's consensus of 1.91 yuan per share. The group's revenue, the company said, rose 24 percent to 80.595 billion yuan ($ 11.6 billion), slightly lower than analysts' forecasts and the lowest growth rate in three years. . Recipes for smartphones, however, have only increased by 7% to 19.5 billion yuan, due to new rules on how much time children can devote to games such as Honor of Kings, League of Legends and Dungeon & Fighter, as well as a recent Chinese government freeze. approvals, entered into force.

"As the leading video game company in China, we seek to create a healthy play environment for children," said Tencent. "We have put in place strict self-imposed restrictions on the minors' game and recently introduced measures, such as the actual identity verification process and the facial recognition check, to improve implementation. We are confident that the initiatives lay a more sustainable foundation for the game development industry. "

Tencent shares were down 0.8% in Hong Kong before the earnings release and closed at $ 272.20 Hong Kong, a move that has brought the decline to 33% since the beginning of the year. values ​​about $ 331 billion.

Tencent's two main online platforms – WeChat and Weixin – saw their average user growth slow to 2.3% from last quarter, while still attracting more than 1.08 billion users each month and growth of 10.85% compared to the same period last year.

"The mini-programs have deepened penetration in different sectors, such as transportation and health care," said Tencent. "The user activity within Weixin has benefited from the strong growth of social video content visualization, with hundreds of millions of daily downloads of social videos."

According to estimates, the Chinese video game industry generates sales of about 38 billion dollars a year, while developers benefit from a social media landscape of about 700 million dollars. daily users. Government officials, however, want to slow down the growth of the sector and have limited approvals for new games last month and new guidelines on gaming time last week.

"The use of electronic products for purposes other than learning should not exceed 15 minutes nor an hour a day," said the Ministry of Education in a statement including offering advice on frequent breaks at play. The younger the children, "the longer the time of continuous use of electronic products is short," insisted the ministry.