September 19, 2021

Biz Journal

Business perfection

Tencent to Work With Chinese language Regulators to Restrict Minors’ On-line Sport Time

Tencent Holdings Ltd.

TCEHY 4.49%

pledged to work with Chinese language regulators and business counterparts to handle how minors use on-line video games and mentioned its April-to-June electronic-game income rose at its slowest tempo since 2019 amid China’s intensifying scrutiny of the tech sector.

Tencent President

Martin Lau

mentioned that regulators are centered on limiting the quantity of money and time that minors dedicate to on-line video games throughout all platforms and that the corporate has been proactively addressing the problem. Tencent, a dominant participant in China’s cellular sport market, stands to learn from such potential guidelines as a result of shoppers are more likely to flock to its video games with the restricted period of time they’ve.

“If we are able to truly discover a technique to regulate the whole period of time that’s spent throughout totally different video games, that will tackle the issue,” Mr. Lau mentioned in a convention name Wednesday. “From the practicality perspective, it’s truly doable.”

China’s largest tech companies have confronted months of tightening authorities rules which have ignited a trillion-dollar selloff in Chinese language equities and curtailed different sectors together with on-line schooling, experience hailing and e-commerce. Earlier this month, Tencent’s main rival,

Alibaba Group Holding Ltd.

, reported quarterly income that missed estimates for the primary time in additional than two years. State media this month criticized on-line video games as “opium for the thoughts,” triggering a selloff in Tencent shares amid considerations that the corporate’s common video games might be swept up right into a broader regulatory crackdown.

Tencent on Wednesday posted a internet revenue of 42.59 billion yuan, equal to $6.57 billion, for the three months ended June, whereas income grew 20% to 138.26 billion yuan owing to greater revenue from its promoting operations and digital-payment merchandise. Its revenue beat analyst estimates, however income fell quick, based on FactSet.

Chinese language tech shares common amongst U.S. buyers have tumbled amid the nation’s regulatory crackdown on expertise companies. WSJ explains a few of the new dangers buyers face when shopping for shares of firms like Didi or Tencent. Photograph Composite: Michelle Inez Simon

The agency’s top-line progress prior to now quarter was dragged down by slowing electronic-game income, which rose 12% from a yr earlier, in contrast with a 40% soar throughout the identical interval final yr.

Tencent, like many different expertise giants, together with Alibaba and

Fb Inc.,

has booked robust earnings because the coronavirus pandemic started, as homebound shoppers turned to on-line services and products. However a string of regulatory actions has despatched Tencent shares tumbling greater than 40% over the previous six months.

Regulators final month ordered Tencent Music Leisure Group to relinquish its unique licensing offers with label firms and halted a Tencent-led merger of two game-streaming platforms, saying that combining the 2 firms would harm competitors.

As Beijing widens its scrutiny, Tencent has additional restricted sport time and spending limits for China’s youth, and it has cracked down on minors misusing grownup accounts. The corporate mentioned minors accounted for a small proportion of its on-line sport income, with gamers beneath the age of 16 accounting for less than 2.6% of its gross sport receipts in China throughout the second quarter.

“The federal government needs to foster a long-term, sustainable growth of the web business,” mentioned Mr. Lau. “We must always count on, within the close to future, extra rules needs to be coming.”

The corporate is being “very cautious” in opening its providers to different firms’ platforms due to sophisticated questions, he mentioned, equivalent to totally different platforms charging totally different charges from retailers. These points have to be mentioned and resolved over time, he added. The Wall Avenue Journal reported final month that Tencent and Alibaba are contemplating strikes to regularly open up their providers to at least one one other, marking an enormous potential shift for China’s client web, which has largely cut up into two camps constructed across the arch rivals.

“It’s not an important precedence for our mission,” mentioned Mr. Lau.

Write to Keith Zhai at [email protected]

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