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China Shortens Kids’s On-line Play Time: Tencent, NetEase Shares Fall

Posted on August 31, 2021 by

China’s National Press and Publications Bureau said minors are only allowed to play online games for up to three hours a week. This is a significant reduction compared to previous rules.

Zhang Peng | LightRakete | Getty Images

GUANGZHOU, China – The shares of two of China’s largest gaming players Tencent and NetEase fell on Tuesday after regulators drastically cut the amount of time children were allowed to play.

However, analysts expect the latest directive will have minimal impact on China’s gambling giants.

Tencent stock was down around 3.2% in morning trading, while NetEase’s Hong Kong-listed stock fell 3.5%.

On Monday, China’s National Press and Publications Administration announced that children under the age of 18 are only allowed to play online games for up to three hours a week and only at certain times.

The ruling significantly reduced playing time for minors who, under the 2019 rules, were allowed to play up to 90 minutes a day for most of the day.

Gaming is the biggest source of income for NetEase and Tencent. However, analysts do not expect the new rules to have a major impact on companies.

Tencent previously said that only a small portion of gaming revenue comes from younger gamers in China.

“We estimate that about 5% of gaming revenue comes from minors under the age of 18, and we believe Tencent will have about 3% revenue impact assuming gaming contributes about 60% of total revenue,” said investment bank Jefferies in a notice published on Monday.

“Minors make up a low single-digit percentage of NetEase’s gaming revenue,” added the analysts.

The Chinese government has long been concerned about gambling addiction among the country’s youth. Content such as games are also strictly controlled in China.

Tencent and NetEase have been through gaming regulations before.

In 2018, regulators froze approvals for new game releases for several months. Tencent and NetEase have already taken steps to limit the time young people play their online games.

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