China media giant Tencent has announced new limits on the amount of time minors can spend playing the company’s online games, even as investors worry that China may extend its historic crackdown on the private sector to the gaming industry.
Tencent is a minority investor in Cary-based Epic Games, the publiser of globally popular Fortnite. Tencent acquired a 40% stake in Epic for more than $300 million in 2013. Founder and CEO Tim Sweeney maintains a majority ownership of privately held Epic, according to the comapny.
Those fears were stoked Tuesday after Economic Information Daily — a business newspaper owned by Xinhua News Agency, which is China’s official news outlet — published a lengthy analysis that used terms such as “opium” and “electronic drug” to describe the harmful effects of gaming on children.
“It turns out ‘spiritual opium’ has grown into a multi-billion dollar industry,” the article read. “Insiders warn: watch out for the harm of online games.”
The post, which has now been removed without any explanation, mentioned Tencent’s popular video game “Honor of Kings” as one of the games young people are addicted to, and said that “industry insiders should be vigilant of the harmful effects of online games, and that appropriate regulations should be adopted early on.”
Tencent’s shares fell over 10% in Hong Kong on Tuesday, but recovered some of the losses to finish the day down 6%.
Tencent said in a statement that its new restrictions will limit the ability for minors to play “Honor of Kings” to an hour on non-holidays and two hours on holidays.
“Minors under the age of 12 (primary school students) are prohibited from in-game spending,” the company added.
It also called for an industry-wide discussion on “the feasibility of banning primary school students under the age of 12 from playing games.”
In recent years, the Chinese government has sought to reverse what it sees as a growing trend of gaming addiction in young people, however Tencent’s restrictions are tighter than the ones Beijing had announced in 2019. According to those rules, gamers aged under 18 are banned from playing online games between 10 p.m. and 8 a.m. On weekdays, minors can play for 90 minutes, while they may play up to three hours per day on weekends and holidays.
The attack in state media on the online gaming industry comes just a week after Chinese tech stocks suffered a massive sell-off that wiped out hundreds of billions of dollars in market value.
Tencent alone lost over $100 billion in market value in a matter of 48 hours as investors worried about China’s widening crackdown on the private sector.
As its shares tumbled, the Shenzhen-based company also temporarily suspended new user registrations for its WeChat messaging platform. It said the move was related to an upgrade of its security systems, in accordance with “relevant laws and regulations.”
Tencent was also hit by a regulatory order last month to scrap its plan to acquire another music streaming player, China Music Corporation. Regulators cited competition concerns, noting that Tencent has long been leading the market.
In recent months, Chinese tech giants have been caught in an unprecedented crackdown on sectors ranging from ride-hailing to education. Since February, shares of overseas-listed Chinese tech firms have lost a staggering $1.2 trillion in value, Goldman Sachs analysts said last week.
(WRAL TechWire contributed to this story.)