Tencent Sheds $54 Billion As China Unveils Latest Gaming Curbs

(Bloomberg) — China unveiled a raft of new measures to rein in spending and content in online games, signaling the start of another industry crackdown that wiped out roughly $54 billion of Tencent Holdings Ltd.’s value.

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Beijing’s top gaming regulator on Friday published draft rules broadly designed to clamp down on practices that encourage players to spend more money and time online. Among other things, they include a ban on rewards for frequent log-ins, forced player-duels and a vague prohibition on any content deemed to violate state secrets.

The sweeping restrictions, which likely surprised industry players and investors, suggest Beijing is getting ready to launch another crackdown on the world’s largest mobile gaming arena. Tencent slid as much as 16% — its biggest intraday fall since 2008 — while smaller rival NetEase Inc. dived 28%. Nexon Co., which derives a chunk of its revenue from China, fell 8%. Bilibili Inc., a social media service popular with gamers, fell 6.1%.

Xi Jinping’s administration has sought to combat gaming addiction, blaming online entertainment for the rise of myopia among youths. Critics have also linked its rise to various ills from unemployment to low birth rates. At the height of the tech-sector crackdown, the government froze approvals for new titles and launched several investigations into content, forcing developers including Tencent to modify certain games.

“This will deal a blow to the overwhelming majority of games in China, except those that sell copies. Companies will need to overhaul their monetization models, including how they charge money from different tiers of players,” said Zeng Xiaofeng, a vice president at Niko Partners.

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