China pulls the plug on $50 bln video-game party

A child plays the game “Honour of Kings” by Tencent at home in Dezhou, Shandong province, China July 2, 2017. Picture taken July 2, 2017. REUTERS/Stringer

HONG KONG, July 22 (Reuters Breakingviews) – Chinese regulators are spoiling the country’s video-games party. Industry revenue fell 1.8% year-on-year to $22 billion in the six months to June, official figures show, the first-ever decline read more . That is probably temporary, given new game approvals are gradually resuming. Still, tightened oversight across the sector, driven by concerns about online addiction and myopia, will continue to throttle growth.

The contraction underscores the toll Beijing’s regulatory onslaught has taken on the sector. In addition to a months-long freeze in approvals, restrictions on how much time and money young people can spend on games have come into force. The gamer population in what was once the world’s largest market is declining, according to official estimates. Industry tracker Newzoo reckons game spending in the U.S. will surpass China’s $50.2 billion this year.

Giants like the $410 billion Tencent (0700.HK) have existing titles to fall back on, plus international markets like Southeast Asia. Nevertheless, analysts at China Renaissance forecast just 6% annual overall video-game revenue growth at the company over the next two years. The party is over. (By Robyn Mak)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

Editing by Pete Sweeney and Pranav Kiran

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