Tech

Chinese Internet Titan Tencent Falters After Chinese Gov. Bans Game

Chinese Internet Titan Tencent Falters After Chinese Gov. Bans Game

Revenue from online games topped 25 billion yuan, up 6 percent year on year.

While PUBG can be played as a free game, Tencent has yet to receive the nod to monetise it. PUBG is a popular battle game with more than 400 million players worldwide developed by Tencent's South Korean partner and investee company, Bluehole. Tencent has lost close to a third of its market capitalization, or around $170 million since its peak in January, but it remains as one of the largest public company in Asia with a market capitalization of almost $400 billion. Tencent has also invested in hundreds of tech start-ups from food delivery to bike sharing in hopes of showing ads to and cashing in on the billion people that use its services every day. Tencent said it was working closely with regulators to get the license, which allows it to make money on the game, for instance by selling virtual items within the app.

The hold-up has battered shares of market leaders like Tencent, which have plunged since the company said it had been ordered to remove hit game Monster Hunter: World from sale, only days after its debut.

China has halted the approval of new game licenses due to a "restructuring of power" in government agencies, Bloomberg reported on Wednesday.

Companies of all sizes - from Chinese-based multinational gaming giant Tencent to fledgling developers - are all impacted by this ban.

"It's quite a big mess", said Serkan Toto, CEO of Tokyo-based game industry consultancy Kantan Games.

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Checks of the National Radio and Television Administration's online list of approved games showed that no new titles had been added since May.

A statement on WeGame's website noted that the game, which launched in China on August 8, has been pulled down because its contents do not comply with the regulatory requirements.

While mobile games such as King of Glory and PlayerUnknown's Battlegrounds, or PUBG, have generated considerable traffic for Tencent, King of Glory has started a downtrend after more than two years of growth.

The media is yet uncertain about the future of the gaming industry. Tencent shares fell as much as 3.9 per cent to their lowest in nearly a year.

'If they previously didn't get an approval, it seems that there will continue to be a hold on that'. A closely watched Communist Party newspaper publicly chastised Tencent previous year over the game, claiming it caused addiction in young people.

Alibaba Group Holding, which competes with Tencent across a number of businesses, is the parent company of the Post.


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