The National Press and Publications Administration of China said minors will only be able to play online games for up to three hours a week. This represents a significant reduction from the previous rules.
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GUANGZHOU, China – Shares of China’s second-largest gaming company, NetEase, fell on Tuesday after regulators drastically reduced the time children were allowed to play.
NetEase fell about 2.9% in afternoon trading in Hong Kong. Meanwhile, rival Tencent fell more than 3% earlier in the day, but was positive later.
Analysts expect the latest directive to have minimal impact on China’s giants, perhaps one of the reasons Tencent’s shares have reversed course.
On Monday, China’s National Press and Publications Administration said children under the age of 18 will only be able to play online games for up to three hours a week and only at specific times.
The ruling significantly reduced the playing time of minors who, by 2019 rules, were allowed to play up to 90 minutes a day for most of the day.
The game is the largest source of revenue for NetEase and Tencent. But analysts do not expect a big impact on companies as a result of the new rules.
Tencent has said earlier that only a small amount of gaming revenue comes from younger players in China.
“We estimate that approximately 5% of gaming revenue comes from under-18s and we believe there is a 3% impact on earnings at Tencent if we assume that gaming contributes approximately 60% of total revenue,” he said. investment bank Jefferies in a note released Monday.
“Minors represent few digits of NetEase’s gaming revenue,” analysts added.
For a long time, the Chinese government has been concerned about gambling addiction among the country’s youth. Content such as games is also tightly controlled in China.
Tencent and NetEase have already gone through episodes of gaming regulation.
In 2018, regulators froze approvals for new versions of the game for several months. Tencent and NetEase have already made moves to restrict the time young people play their games online.