Young Chinese players challenge Beijing’s new rules as gaming companies’ shares dwindle

August 31 (Reuters) – China’s new rules banning under-18s from playing video games for more than three hours a week brought down shares of Tencent Holdings Ltd (0700.HK) and other companies of games, while young players turned to social media to express their outrage.

Beijing said the new rules were needed to stop growing the addiction to what it once described as “spiritual opium.” The People’s Daily, the official newspaper of the Communist Party government, said in an article on Monday after the rules were announced that the government should be “ruthless”.

It is “indisputable” that enjoying online games affects normal study life and the physical and mental health of teens, according to the article. “Destroying a teenager will destroy a family.”

However, the young Chinese players were angry.

“That group of grandparents and uncles who follow these rules and regulations, have you ever played games? Do you understand that the best age for e-sports players is adolescence?” He said a comment on Weibo, similar to China’s Twitter.

“Sexual consent at 14, at 16, you can go out to work, but you have to be 18 to play. That’s really a joke.”

The success of gaming stocks was relatively measured, with analysts saying children in general did not provide much revenue for gaming companies, although they noted that the implications for long-term growth of the industry were much more serious.

“The root of the problem here is not the immediate impact of revenue,” said Mio Kato, an analyst who posts to SmartKarma. “The problem is that this movement destroys all the nature that forms the habits of playing at an early age.”

Shares of Tencent, the world’s largest gaming firm by revenue, fell 3.6% in trading on Tuesday. Stocks have lost nearly 5% since the state media article describing the games as spiritual opium was released on August 3rd.

Jefferies analysts said Monday they expect to have a 3% impact on Tencent’s earnings from the new rules, assuming the game contributes about 60% of its total revenue.

NetEase (9999.HK), listed in the US, fell 3.4% in overnight trading, with its Hong Kong shares down a similar amount on Tuesday.

Krafton Inc (259960.KS), the South Korean company that earns fees by providing services for a game similar to its blockbuster “PlayerUnknown’s Battlegrounds” (PUBG) in Tencent in China, fell 3.4%.

Nexon (3659.T) and Koei Tecmo (3635.T), listed in Tokyo, both with exposure to the Chinese market, fell 4.8% and 3.7% respectively.

Brenda Goh Reports; Additional reports from Donny Kwok in Hong Kong, Joyce Lee in Seoul and Sam Nussey in Tokyo; Edited by Edwina Gibbs

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