As a result of China's recent clampdowns on gaming and its larger industry, Tencent's value has dropped $60 billion. Founded in 1998, Tencent is a Chinese technology conglomerate holding company that also serves as the parent company to the hugely popular League of Legends' developer, Riot Games.

The Chinese government has led a years-long effort to crack down on gaming. Recently, however, the country passed new regulations that only allow Chinese minors to game three hours a week. These terms are harsher than previous gaming restrictions, which allowed minors (under 18) to game for an hour and a half on weeknights and three hours on weekends and holidays. However, this past August, state-run media likened gaming addiction to opium addiction, specifically mentioning Tencent's affiliated titles as culprits.

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Now, additional state government intervention has damaged Tencent's stock value. As reported by Bloomberg, state regulators recently met with Tencent and other industry leaders to advise they look beyond profit and work to prevent minors from developing gaming addictions. Moreover, regulators claimed that China will now slow future approval for new online games. The meeting added to investors' fears amid the government's crackdown on gaming - and combined with the previous dip in stocks that followed after state media equated opium addiction with gaming addiction, Tencent stock has since plummeted by over $60 billion in value.

 

This past Thursday, Tencent's afternoon trading losses in Hong Kong caused the company to finish 8.5 percent lower than earlier, even steeper than its value's drastic fall in July. The effects of the crackdown reach even further, though. Bloomberg also reported that "Prosus NV, Tencent’s biggest shareholder, fell 6.6 [percent] in Amsterdam while parent Naspers Ltd. dropped as much as 8.3 [percent] in Johannesburg." Last month, Tencent promised to appease the government by restricting minors' playing time and the amount of money spent on games. The company also recently developed a Tencent-brand facial recognition feature to prevent younger players from excessive gaming.

With China's newest gaming laws, video game companies are going to be kept on their toes for the foreseeable future. It doesn't seem the government is slowing their efforts to regulate the industry any time soon, and game developers will likely continue to take the brunt of the monetary damage - potentially prompting both stockholders and video game companies to invest elsewhere. Its effects on the global gaming industry are still unclear; however, there is reason for concern, given China is the world's largest gaming industry.

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Sources: Bloomberg