Regulators of the Chinese Communist Party have come down hard on several key pieces in the live service model, leading to spiralling shares for major players in the market as investors scramble to assess the damage.
According to a Reuters report, «nearly $80 million in market value» has sloughed off Tencent Games and NetEase Games: «Shares in Tencent Holdings (0700.HK), the world's biggest gaming company, tumbled as much as 16% at one point, while those of its closest rival, NetEase (9999.HK), plunged as much as 25% after the National Press and Publication Administrations published the new draft rules.»
Tencent Games is the parent company of studios like Riot Studios (League of Legends) and Fatshark (Warhammer 40k: Darktide). Meanwhile, NetEase has played a hand in games like Diablo: Immortal and Dead By Daylight mobile. MiHoYo (the company behind popular gacha games like Genshin Impact and Honkai: Star Rail) is also based in China.
The tech correspondent for Reuters Josh Ye has shared the full list of draft rules on Twitter. These included requirements for publishers to store their servers in China, preventing «luck-based draw features» offered to minors, enforcing spending limits, and stopping daily log-in rewards.
As shared in Bloomberg's report, a senior analyst at Forsyth Barr Asia Ltd (a financial advisory company based in Hong Kong) describes a dejected atmosphere: «It caught people off guard, right before the holiday … It feels disheartening as well for this to happen after a year that is already so difficult for the market.» Meanwhile, the Financial Times describes a stunned trading desk head at an investment bank: «This was supposed to be a quiet day before Christmas … I haven’t seen moves like this in these
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