Following proposed limits that resulted in huge losses for investors in big game companies last week, China’s press and publishing regulator allowed 105 new online games and stated that it firmly supports the sector. The Game Working Committee of China Music and Digital Association’s approvals are “positive signals that support the prosperity and healthy development of the online game industry,” according to a statement released by the National Press and Publication Administration on its WeChat social media account on Monday.
Gaming companies hit by new regulations
Among the games were those published by China’s top two gaming companies, Tencent Holdings Ltd. and NetEase Inc., which have been severely impacted by Beijing’s new regulations. The approvals on Monday indicate that the Chinese government is in favor of the growth of online gaming, according to a statement from a trade group on WeChat that was reposted by the official Xinhua news agency.
Chinese benchmarks fell and tens of billions of dollars were lost as a result of the Friday share price collapse of video game companies Tencent and Netease due to draft recommendations for restrictions on online gaming. According to the administration’s recommendations, incentives for daily log-ins or purchases would not be allowed in online games. Users may only recharge a certain amount, and they may receive alerts for “irrational consumption behavior.”
Market value $10 billion drop
On Friday, Netease’s shares traded on the Nasdaq plummeted 16.1%, while its shares traded in Hong Kong plummeted 25%. Tencent ended the day 12% down. A smaller manufacturer of online games, Huya Inc., had a 10.7% loss on the NYSE. The market value of the corporations dropped by tens of billions of dollars overall. Due to the Christmas holiday, Hong Kong’s market was closed on Monday. Shanghai’s share prices were stagnant.
According to the Press and Publication Administration, 977 game version numbers were generated locally and 98 were imported out of 1,075 total game version numbers that were issued in 2023. The report also included a citation to a “2023 China Game Industry Report,” which stated that 668 million people were playing video games in 2023 and that the domestic online games industry generated sales income of over 300 billion yuan ($42 billion).
It said; “The Game Working Committee hopes that member units will take this opportunity to launch more high-quality products, promote high-quality development of the online game industry, and contribute to promoting cultural prosperity and development and building a culturally powerful country.”
Shanghai Stock Exchange saw some increase
Monday saw a 0.1% increase on the Shanghai Stock Exchange, but several firms in the gaming industry still declined. The Hang Seng in Hong Kong was closed on Christmas and will stay closed until Wednesday. Tencent is an American over-the-counter company that is listed in Hong Kong. Alibaba and JD.com are listed in both Hong Kong and the United States.
In recent years, China has implemented a number of policies aimed against the online gaming industry. Because of their concerns about video game addiction, officials set a weekly restriction of three hours for minors to play video games in 2021. New game approvals were halted for around eight months until starting up again in April 2022 when a more comprehensive crackdown on the entire tech sector was loosened.
