Chinese state media have described online games as “spiritual opium,” causing tech giant Tencent to lose almost $60 billion USD in stock value.
Reuters reports that the Economic Information Daily (affiliated with Xinhua, China’s largest state-run news agency) had cited Tencent’s Honor of Kings in an article on minors being addicted to online games, playing for up to eight hours a day.
“‘Spiritual opium’ has grown into an industry worth hundreds of billions. […] No industry, no sport, can be allowed to develop in a way that will destroy a generation.” The drug opium is still a sensitive subject; following Britain exporting the drug to China, rising addiction, two Opium Wars, and China ceding Hong Kong to Britain 1842.
The Economic Information Daily called for more enforcement against the industry. Tencent also issued a statement that they would introduce more measure to reduce the amount of time and money minor spent on their games; starting with Honor of Kings.
This would include under 12s being prohibited from spending money in the game, and further time restrictions (from 1.5 hours to 1 hour on non-holidays, and from 3 hours to 2 hours on holidays). Tencent also reportedly called on a ban on children under 12 playing video games.
This resulted in Tencent stock losing over 10% in early trading; a loss of almost $60 billion USD. Reuters noted that at one point August 3rd, Tencent was briefly no longer Asia’s most valubale firm by market capitalisation; coming second for a time to Taiwan Semiconductor Manufacturing.
Other Chinese social media and gaming companies saw losses, including NetEase (7.77%, lowest at 15%), XD Inc (8.1%), and GMGE Technology (13.59%).
The news even had impacts in the west; with shares in Prosus, Ubisoft, Embracer Group, and Activision Blizzard down 6%, 2.5%, 4.7%, and 2.3% respectively. However, the latter may be due to the ongoing sexual harassment and discrimination lawsuit against the company, along with President J. Allen Brack stepping down.
While all signs indicated it would be Tencent’s biggest fall in stock value in a decade, the losses were reduced after the article reportedly “vanished” from the news website and WeChat account on the afternoon of August 3rd. The article reappeared later in the day, with the “spiritual opium” term removed, and other sections reportedly edited.
The reposted article also reportedly called for authorities, game developers, and families to work together in preventing addiction to online games in children. They also stated parents had to supervise their children.
In October 2019, a study by Oxford University has found no evidence to support the classification of “gaming disorder.” Earlier that month, a neuroscientist at Radbound University warned against labeling gamers as addicts, due to “very little evidence“ of video games being addictive.
Chris Ferguson (professor of psychology at Stetson University in Florida, Psychologist and media researcher), also condemned the World Health Organization’s classification of gaming disorder as an addiction. This was further compounded by reports’ and Ferguson’s own email with anonymous WHO officials saying they were under pressure to push this diagnosis from stakeholders and “primarily Asian countries.”
The Chinese government’s attempts to curb the video game industry in their nation have included a real-name authentication system, banning games with content or user content that is “illegal” or addresses controversial themes [1, 2], facial recognition for mobile games, limiting how much children play video games, and more.
A proposed law would have seen Chinese gamers banned from interacting with foreigners. The law also proposed banning depictions of zombies and plagues due to the coronavirus pandemic, map editing, customizing clothes, and forming organizations.
These laws are further enforced via social credit. The law grants perks for “good citizens” (access to better schools for your children), and restrictions on “bad citizens” (publicly named and shamed, or banned from using public transport). Some even fear the US tech giants are unintentionally or otherwise creating a similar system.
With government officials comparing gaming to drugs, it is unlikely someone who is deemed as playing games too much could be deemed a “good citizen.”
Tencent had previously lost $20 billion USD in 2018 thanks to the Chinese Ministry of Education recommended less video game approvals.
Tencent’s portfolio includes ownership of Riot Games, Sumo Digital’s parent company, 80% of Grinding Gear Games, 40% in Epic Games, 29% in Funcom, 5% in Activision Blizzard, 5% in Ubisoft, 5% in Paradox Interactive, a “major investment” in PlatinumGames, a majority stake in Klei Entertainment, a major shareholder for Marvelous, a minority stake in Dontnod Entertainment, and others.
In earlier news, Tencent were reportedly negotiating with a US national security panel to keep their investments in US companies Epic Games and Riot Games. Most recently, a German outlet reported from their sources that Tencent sought to acquire Crytek; which may also give them access to the western military simulators the developer makes.