Beijing's gaming spend curb: world's largest market sees $80bn plunge
Chinese regulators decided to introduce a series of regulations aimed at limiting spending on video games for Chinese people. This presents a significant challenge to the world's largest gaming market, which was just beginning to regain its former strength following a recent crisis. The regulations announced by Beijing effectively set spending limits on online games and consequentially sparked concern amongst investors, as reported by Reuters.
1:58 PM EST, December 23, 2023
Chinese giants are losing value
As a result, says the agency, the market value of the two largest Chinese gaming companies plummeted by nearly 80 billion dollars. This occurred as investors scramble to determine the potential impact on profits and brace for possible further restrictions.
According to the new regulations, online games will be prohibited from rewarding players for daily logins, their first in-game purchase, or repeated purchases. All of these mechanisms are commonly leveraged in online games.
The aftermath of these regulations led to a significant decrease in shares. Shares of Tencent Holdings, the world's largest gaming company (and acquirer of Poland's Techland), fell at one point by up to 16 percent. Meanwhile, shares of its closest rival, NetEase, decreased by as much as 25 percent after the National Press and Publication Administration published a new draft of regulations, as reported by Reuters.
