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Tencent Part of $60B Loss Amid Gaming Restrictions

  • Tencent and NetEase lost more than $60 billion combined in market value on Thursday.
  • The drop comes as investors anticipate additional restrictions on gaming.
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Tencent/Design: Alex Brooks

Tencent and NetEase lost more than $60 billion in combined market value on Thursday as investors anticipate additional restrictions on gaming. 

The drop in value is the result of Chinese regulators informing gaming companies on Wednesday that the country plans to delay approvals for all new online games

Chinese state media branded online games “mental opium” and added that games have a negative impact on the health of minors — which led to new regulations that restrict children to three hours of gaming per week. 

Chinese regulators ruled in July that Tencent failed to meet requirements on relinquishing exclusive rights. Since last year, the conglomerate has faced antitrust concerns over not reporting details of several investments and other anticompetitive practices.

Despite the challenges, Tencent remains a global leader in gaming. 

  • It took a majority stake in Berlin-based game maker Yager in June.
  • It acquired British gaming company Sumo Group in July for $1.27 billion.
  • It’s building a streaming platform after its merger of Huya and DouYu was blocked. 

Tencent generated $21.5 billion in revenue in Q2 2021, a 20% increase year-over-year. The company’s gaming business alone took in $6.6 billion in revenue, a 12% uptick compared to Q2 2020. 

Shares of Tencent dropped 8.48% after market close on Thursday, while NetEase fell 11%.

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