Last week we reported on some newly drafted restrictions by Chinese regulators that were aimed at curbing game time, limiting rewards for spending and logging in, and applying a wide swath of lockbox restrictions. The news initially caught the market off-guard and sent the stock value of some of the country’s biggest games makers and publishers into a nosedive, and now it looks as if the government is trying to staunch the bleeding after $80 billion in market value was evaporated by the proposal.
Tencent, NetEase, and social media platform Bilibili saw massive sell-offs of stock, all three of which contributed to the billions of market losses, while the impact was even felt as far as the US and Paris, all spurred by fears of another significant crackdown on gaming and tech that ramped up between 2020 and this year, including game approval freezes, gaming time limits for minors, and a mandatory age rating system, all in an attempt by China’s government to fight what it called “spiritual opium” at the time.
Shortly after the drafted restrictions were made public, China’s National Press and Publication Administration began to try to soften its stance, first with a notice shared this past Saturday that it would carefully study the games industry’s reaction and improve the suggested rules, then following that statement up with an approval of 105 new online games this past Monday while affirming its “active support for the development of online games.”
The moves made by the NPPA haven’t fully recovered all of the lost stock value for Tencent and NetEase this week, but it has appeared to level things off, and NetEase appears to be taking an uptick in value in trading today. Bilibili’s stock has similarly started to see some recovery.
