China’s Tencent tightens games controls for children after state media attack

Tencent, the Chinese tech giant, has announced it will curb the time children spend playing its flagship computer game after its shares were sent into a tailspin by state media attacks againstthe gaming industry for peddling “spiritual opium”.

In a social media post, Tencent announced a range of new measures after it said “relevant authorities” had requested greater protection of minors in gaming and for firms to carry out their “societal responsibility”.

Hours earlier, an article in the Economic Information Daily, which is affiliated with China’s biggest state-run news agency Xinhua, had compared digital games with “electronic drugs” and called for more restrictions on the industry to prevent “widespread” addiction among children.

While it did not mention China’s largest social media and video game firm by name, it criticised Tencent’s flagship game Honor of Kings, the world’s top-grossing game for the past two years.

“No industry, no sport, can be allowed to develop in a way that will destroy a generation,” the article said. “Society has come to recognise the harm caused by online gaming and it is often referred to as ‘opium for the mind’ or ‘electronic drugs’.”

Parents quoted in the article spoke of children playing the game for seven hours a day, skipping breakfast to buy games, and their grades plummeting.

The article wiped $60bn (£43bn), or almost 11%, off Tencent’s market capitalisation as investors feared that gaming would become the latest target of a regulatory crackdown on China’s biggest technology companies. However, its shares rallied to end 6% down after the article was deleted online without explanation just a few hours after publication.

“Fears over Chinese regulatory interference aren’t going away, with Tencent the latest stock to slump on chatter about Beijing seeking to wield its power,” said Russ Mould, investment director at investment platform AJ Bell. “[Tencent’s shares] are now down by more than a fifth year to date as investors reassess their willingness to have exposure to big Chinese names.”

Tencent is a multinational tech powerhouse, running China’s largest social media and gaming networks, along with e-commerce and online payments businesses. Despite the pandemic, which has propelled tech firms in America to new heights, its value has crashed by almost $400bn this year as investors take fright at moves by Chinese regulators to curb the power of China’s largest tech firms.

The Economic Information Daily article was followed hours later by a separate opinion piece on the same topic by the China News Service on its Weibo account, a Twitter-like service. Taking a softer stance, it said “schools, games developers, parents and other parties need to work together”.

The new restrictions, which will initially apply only to Honor of Kings, will stop under-12s from spending money in the game and further reduce the duration they can play each day from 1.5 hours to one hour normally, and from three hours to two hours on holidays. The new restrictions are tougher than those required by the authorities.

In the fallout, a related Weibo hashtag drew more than 13m views. Some supported the new measures, while others said such regulation should be up to parents, or accused existing failsafes of having too many loopholes. Comments on the original article were divided. Some decried letting the game “ruin all the youth in China for huge profits”, while others likened it to telling people to “stop eating in case of choking”.

In June, more than a third of the top 10 games revenue came from Honor of Kings and another Tencent title, the mobile game PlayerUnknown’s Battlegrounds. The company’s biggest games are designed not for consoles, but for playing online or on mobile phones using Android and Apple devices.

Tencent also raised proposals for the entire industry to consider including a ban on gaming for children under 12. Chinese authorities have sought to limit the amount of time minors spend playing video games, including a temporary ban on new video game licences in 2018.

NetEase and Tencent have already enacted some protections for younger players, including a Tencent facial recognition feature on smartphones, to ensure that a gamer is an adult.

Chinese authorities are have not hesitated to control the content of games, censoring titles over perceived political breaches, or placing strict and sometimes bizarre content requirements on foreign firms wanting to sell their titles in China. Gambling, strong violence and nudity are banned, but so too are games that promote cults or “feudal superstitions”.

Tuesday’s events prompted fears that authorities had lined up the industry as its next target after crackdowns on tech and private education. In the past year, China has embarked on a regulatory crusade to curb the growing power of its homegrown big tech.

Last month, China’s anti-trust regulator ordered Tencent to give up its exclusive music licensing rights and fined the company for anti-competitive behaviour.

In April, Alibaba paid a record $2.8bn fine to settle an anti-monopoly investigation. Earlier this year, Beijing ordered Alibaba to sell off some of its media assets, which include Hong Kong’s South China Morning Post. It previously blocked the planned $34bn flotation of the online payments subsidiary Ant Group.