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Tencent and Netease pops up as China reinstates gaming approvals

Tencent Holdings, the Chinese Internet and gaming conglomerate, and its peer NetEase (Nasdaq: NTES) jumped on Friday following Chinese government’s decision to resume game approvals. Tencent increased by 4.5% in the Hong Kong stock exchange and NetEase was up about 4% during the mid-day in Nasdaq.

Tencent Games - PUBG
A player playing PUBG on mobile Image Courtesy: Wikimedia Commons

A senior official of the Chinese government said in a conference on Friday that the government has started working on providing licenses for the new gaming releases. The regulatory agencies, which monitors entertainment content in China, has stopped giving licenses since March-end.

Chinese gaming firms were expected to expand internationally and M&As were expected to occur if the Chinese government continues to freeze gaming licensing. However, the recent decision by the Chinese government has given some hope for Chinese gaming companies.

Gaming industry analysts said that Tencent has lost its opportunity to generate revenue from Fortnite and PUBG games in the recent time. The Chines government wants teenagers not to get addicted to video/mobile games as their studies and health are getting affected.

According to Statista, the mobile gaming revenue in China is expected to grow from $12.54 billion in 2016 to $22.52 billion in 2022.

NetEase Q3 profit dips 39% but beats estimates

Even though the Chinese regulatory agencies have started the process of licensing new game releases, still they would have a severe control on the content of the games, which will be a concern for Chinese gaming companies.

 

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