Global Gaming Shares Fall After Draft China Rules Released -- Update
December 22 2023 - 5:28AM
Dow Jones News
By Jiahui Huang
Global gaming stocks sank after Beijing released draft
regulations for the online game industry that included restrictions
on incentives to play or spend more online.
Shares of Netease, one of China's major online gaming companies,
fell some 25%. Tencent, the Chinese tech juggernaut that is also a
domestic gaming giant, ended the day down 12%--wiping out $46
billion in market value and representing its largest one-day share
loss since October 2022.
In Europe, shares of Prosus, which holds a large stake in
Tencent, and gaming giant Ubisoft Entertainment fell sharply,
too.
If implemented, the rule could lead to a reduction in player
monetization, hitting revenue and profit margins for gaming
companies operating in one of the industry's biggest markets,
Equita SIM analyst Gianmarco Bonacina wrote in a research note.
France's Ubisoft was down almost 8% in European morning
trading.
The rout came after Chinese officials released draft regulations
for the online gaming industry. The proposals include limiting
users' in-game spending. The proposals also would prohibit minors
from tipping hosts who livestream games and would stop companies
from offering probability-based lottery services to under-18
users.
Game companies also wouldn't be allowed to set rewards that
might encourage more time or money being spent online, including
incentives for daily logins, according to the draft rules released
by the National Press and Publication Administration.
The agency said it is seeking public comment on the rules until
Jan. 22, 2024.
--Adria Calatayud contributed to this article.
Write to Jiahui Huang at jiahui.huang@wsj.com
(END) Dow Jones Newswires
December 22, 2023 05:13 ET (10:13 GMT)
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