Tencent has ‘good news’ as Chinese regulator appears to soften proposed gaming rules

China has been strict with its gaming industry for the past few years. In 2021, the country imposed a curfew for video game players who are minors. Later on, China’s cyberspace regulator mandated that children under the age of 18 should be limited to a maximum of two hours a day on their smartphones. Just when players and gaming companies started believing that China was finished with its new regulations for the games industry, regulators proposed new rules to curb the growth of gaming in the country.
Last week, China’s National Press and Publication Administration proposed new rules that targets in-game spending. The new law seeks to curb spending and the use of rewards that encourage users to play video games regularly.
The proposed law majorly impacted the shares of Chinese gaming giants Tencent and NetEase while denting other companies that operate in the Chinese market. Nearly $80 billion was reportedly wiped briefly from the valuations of the two Chinese gaming majors.
According to a new report by the news agency Reuters, Chinese authorities have promised to make improvements to proposed rules which affected the stocks of video game companies. After the latest news, Tencent Holdings also saw its shares stage a partial rebound.
How China seeks to soften the proposed gaming rules
The report claims that China’s video game regulator said that it would improve the rules by “earnestly studying” public views. The draft rules, which are open to public comment until January 24.

In a note to clients, Nomura analysts wrote: “We believe these fire-quenching measures may help to slightly ease market concerns, but they are not enough to remove the overhang caused by the draft regulation.”

This news helped Tencent’s shares to grow by 5% after it went down by 12% last week. Meanwhile, shares of Tencent’s rival NetEase also went up by 10% after going down by 25% during the same time. For comparison, Tencent derives a fifth of its revenue from online gaming while NetEase gains 80% of its revenue from domestic online gaming.
NetEase also recently had a discussion to partner with World of Warcraft-maker Blizzard after parting ways a year ago. The company’s Chinese subsidiary, Blizzard China shared a post earlier this month saying that it is in talks with publishing partners in China to continue the game’s service in the country.
In December, China’s video game regulator also approved new licenses for 105 domestic online games which is more than the average month.