Ultimately, analysts predict the new changes could force Chinese companies to seek surer footing away from home soil, resulting in them becoming more reliant on the global market. The Chinese Government has announced plans to the approval of new games for release and the overall number of games available.
China's education and media authorities will restrict the expansion of online games sector and establish related time limits for kids in a bid to lower the number of new myopia cases among the young. The push, personally championed by Xi, is aimed primarily at reducing nearsightedness in children and teenagers by at least 0.5 percentage point a year till 2023, according to a statement posted on the ministry's website. Capcom Co. tumbled as much as 7.1 per cent, while Nexon Co., which gets about half its revenue from China, fell as much as 5.1 per cent.
"Gamers always find a way to spend more time or money than allowed", says Serkan Toto, founder of Tokyo-based game consultancy Kantan Games.
Tencent, which has benefitted richly from game play in recent years, saw regulators block the sale of a recent title, Monster Hunter: World, because it was considered too violent. Its stock has plunged almost 30% since January, wiping out more than $160 billion in market value. Myopia among students is more common and is affecting children at younger ages, Xi said, according to the Xinhua News Agency this month.
"The new rules/guidelines will create another overhang for the gaming industry's growth outlook, adding further uncertainty on top of the hold-up of the games approval process", Alicia Yap, an analyst with Citigroup, said in a report.
Netease fell 7.2% in NY. The government has also called parents, guardians, and educational institutions to limit children's access to gadgets, particularly those non-learning purposes, to 15 minutes at most, not exceeding to one hour per day. But if a company as powerful as Tencent is taking a hit, it seems reasonable to assume that the Chinese economy could ultimately suffer from the ramifications of these restrictions.