Chinese online gaming stocks are taking a hit.
Just weeks after Chinese regulators said video games were “spiritual opium,” the country just announced it would restrict the hours when minors could play games. From now on, minors can only play for a single hour on Friday evenings, holidays, Saturday, and Sundays.
All of which is putting a dent in gaming stocks like Tencent, Netease, Huya, and Sohu. com. And, all because China believes video game addiction is to blame for societal ills, such as distracting young people from school and family.
In addition, according to The Wall Street Journal, “The government announcement said all online video games will be required to connect to an ‘anti-addiction’ system operated by the National Press and Publication Administration. The regulation, which takes effect on Wednesday, will require all users to register using their real names and government-issued identification documents.”
The news is even impacting stocks like Activision Blizzard and Take-Two Interactive, both of which were looking for access to the Chinese market with Tencent.
Right now, “There are over 110 million minors that play video games in China today, and we expect the new limits to lead to a decline in the number of players and a reduction in the amount of time and money spent in game by those under 18,” Daniel Ahmad, senior analyst at Niko Partners, said, as quoted by CNBC.
“However, we do not expect the decline in spend to have a significant material impact on the bottom line of game companies given limits on time and spending have already been in place for minors for the past two years. Therefore, we expect a softer impact on overall growth rates as spending among minors was already low,” they added.
Once the panic subsides, Chinese gaming stocks could be great “blood in the street” trades.