In China, mum and dad don’t decide how long children and under 18s they can play video games online. In China, as in so many other things, also in this case it is the government that decides. And the latest news from Beijing will not please the youngest video game enthusiasts: in the last few hours, confirming the hard line pursued almost obsessively against some of the hottest names in hi-tech Corporate China – Tencent, Didi, Alibaba – the authority responsible for the control and regulation of the publishing, communications and Internet sector, or the National Press and Publication Administration, has published new rules that they set at three per week the maximum number of hours that children and under 18s can play video games. Not only that: they are established even the hours in which to play.
According to the translation of the text published on the national agency’s website, minors under 18 will have access to video games one hour a day between 8pm and 9pm on Fridays and weekends and on national holidays.
The rules, the agency explained, were designed to safeguard physical and mental health of the children from that activity – using video games – which Beijing once branded a sort of “Spiritual opium”.
But how can we be sure that the children and their respective parents will comply with the new provisions?
Simple: ordering the order to the giants that provide these services, such as Tencent and NetEase.
According to reports from the CNBC, the rules will apply to those companies that provide online video game services to minors, who will thus also have to comply with the new time slots. In addition, companies should not allow access to services to customers who have not signed up to their platforms with their real names. The latter provision was established to prevent the companies involved from being able to circumvent the rules by citing as an excuse the fact that they do not know the identity of their users. The new NPPA rules significantly reduce the amount of hours children can play online games. The 2019 legislation allowed the little ones to play online for an hour and a half almost every day.
Obviously, the big Chinese in the video game sector did not take the news well, in particular Tencent and NetEase which, on the Hong Kong stock exchange, saw prices drop between 3% and 4%. The worsening sentiment at a time when China continues to attack its hi-tech has led the Hang Seng index to drop more than -1.4%. Sentiment subsequently improved, both due to the rise in US futures and the indications of some analysts, who urged not to dramatize the impact of Beijing’s decision on the hi-tech giants. Sure, video games are the biggest source of revenue for NetEase and Tencent. However, a very low component of turnover is linked to the services provided to minors. “In estimating an incidence of gaming on Tencent’s total profits equal to 60%, we believe that the impact on profits can be approximately 3%, considering that only about 5% of the turnover deriving from gaming comes from children under 18” Jefferies analysts commented in a note. Among other things, already in 2018 Tencent and Netease, constantly struggling with the discontent of Beijing, had already established restrictions on the number of hours in which the little ones can play online.
“There are more than 110 million minors playing video games in China today, a factor that leads us to estimate that the new limits will cause a drop in the number of users and a reduction in the amount of time and money that will be dedicated by children under 18 in these activities – commented Daniel Ahmad, senior analyst at Niko Partners – However, we do not believe that the drop in expenses will have a significant impact on the results of gaming companies, as limits on the time and spending of minors have been imposed for two years already. Spending by minors was already low, so we expect a more slight impact on overall growth rates ”(of the groups concerned). However, the effect of the announcement was also felt on the Tokyo stock exchange, where the titles of video game producers Nexon and Koei Tecmo lost up to -5% and -4.4% respectively. On the other hand, in the last fiscal year, 28% of the turnover collected by Nexon came from China.