China's tighter gaming limits seen to hurt nascent space

China will forbid minors from gaming more than three hours most weeks of the year, imposing their strictest controls yet over entertainment for youths in a blow to the world's largest mobile gaming arena.

Gaming platforms from Tencent Holdings Ltd. to NetEase Inc. can henceforth only offer online gaming to minors from 8 p.m. to 9 p.m. on Fridays, weekends and public holidays, state news agency Xinhua reported, citing a notice by the National Press and Publication Administration. The new rules, which limit teen playing time to three hours most weeks of the year, is a major step-up from a previous restriction set in 2019 of 1.5 hours per day, most days.

The escalating restrictions on Tencent's biggest business are likely to spook investors that had cautiously returned to Chinese stocks in recent days, exploring bargains after a raft of regulatory probes into areas from online commerce to data security and ride-hailing ignited a trillion-dollar selloff in past weeks.

Netease slid as much as seven per cent in pre-market trading in New York, while Prosus NV, Tencent's biggest shareholder, fell 1.9 per cent in Europe.

“Three hours per week is too tight. Such a policy will have negative impact on Tencent too,” Steven Leung, an executive director at UOB Kay Hian (Hong Kong) Ltd. said. “I thought regulatory measures would take a break gradually but it's not stopping at all. It will hurt the nascent tech rebound for sure.”

Tencent and other companies have said minors account for only a fraction of their businesses, especially after recent restrictions. The country's largest games company has said the revenue from minors yields less than three per cent of its gross gaming receipts in China.

❚ Other key points in the new rules include:

❚ All online games should be linked to a state anti-addiction system, and companies can't provide services to users without real-name registrations

❚ Regulators will ratchet up checks over how gaming firms carry out restrictions on things like playing time and in-game purchases

❚ Regulators will work with parents, schools and other members of the society to combat youth gaming addiction

❚ The rules underscore the extent to which Beijing is intent on curbing gaming addiction and pushing its future workforce toward more productive pursuits.