Tencent Stock Dips After Chinese Media Calls Video Games "Spiritual Opium"
Tencent's stock price took a dip after a state-owned media outlet in China called video games "spiritual opium" due to minors experiencing "gaming addiction."
Tencent's stock has taken a dip after a state-run news agency in China said video games are like "spiritual opium" or "electronic drugs." As reported by WSJ and Bloomberg, Tencent's stock fell about 11% after The Economic Information Daily ran an article blasting gaming in reference to a student who said he played Tencent's game Honor of Kings eight hours a day.
The Economic Information Daily is owned by Xinhua News Agency, a government-controlled news agency that is very influential in China. The article calling for stricter regulations on gaming in China may have caused investors to panic, resulting in the drop in stock price. The online version of the article was pulled, possibly due to the harsh comparisons.
"The word choice of spiritual opium is especially harsh, it would be surprising if the regulators won't do anything about this," Ke Yan, a Singapore-based analyst with DZT Research, told Bloomberg.
In response to the article, Tencent said that it will institute stricter limitations on minors' playtime in Honor of Kings. Young gamers will be limited to one hour per day during the week and two hours per day on weekends and holidays. Anyone under the age of 12 will not be able to make in-game purchases. China already has some limitations on how much playtime minors can have, but these new limitations are more than required by the government.
"China has already implemented strict anti-addiction laws to curb gaming addiction among minors, which will continue to develop and play an integral part in the games industry there," analyst Daniel Ahmad said on Twitter.
China has always had a tense relationship with video games, not even allowing consoles in the country until 2015. Tencent has been very active in games lately, buying Sumo Digital for $1.27 billion. The Tencent-owned TiMi Studios also recently released Pokemon Unite on Nintendo Switch, with a mobile version coming in September.
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