Chinese Communist Party regulators have announced numerous and stricter rules on video games, leading to a large drop in Chinese market value.
The new report (via the Reuters) confirms “nearly $80 billion in market value” has been wiped off Chinese giants Tencent Games and NetEase Games.
Shares in Tencent Holdings, the world’s biggest gaming company in market value, tumbled as much as 16% at one point. NetEase stocks dropped as much as 25% after the new Chinese rules were announced.
The new regulations, announced just before the holiday break, are tough on several main components of live service model games.
In brief, the new regulations focus on preventing “luck-based draw features” for minors, stopping daily log-in rewards, implementing spending limits, and even requiring Chinese publishers to store their servers in China.
The implications on the new regulations with Tencent and NetEase alone are too large to fully assess and could totally halt the main revenue method of “gacha” games, which pursue “whales” that spend lots of money to win luck-based draws in game.
Both giant companies now own numerous game companies, Tencent now owns: Riot Studios, Funcom, Sumo Group, and more. NetEase has acquired a range of studios from Grasshopper Manufacture to Quantic Dream.