Asian Tech Press -- China state media The Economic Information Daily, affiliated with Xinhua News Agency, issued an article on Tuesday slamming the game industry, saying that the dangers of games are being increasingly recognized by society, and people often use the term "spiritual opium" and "electronic drug" to refer to online games.
Affected by this news, Chinese gaming stocks fell hard across the board. As of lunch break in Hong Kong, CMGE Technology Group Ltd (0302.HKG) was down more than 20%, IGG Inc (0799.HK) dropped about 8%, NetEase, Inc. (9999.HK) fell about 12%, and Tencent Holdings Ltd (0700.HKG) shed about 10%.
According to the Economic Information Daily, Internet addiction among Chinese minors is currently widespread, and it cannot be underestimated that online games have an impact on the healthy growth of minors.
Behind the increasing penetration of online games to minors is China's growing game industry. With the rapid development of the game industry, its attraction to minors is getting stronger and stronger, making it increasingly difficult to prevent addiction to online games.
A market analysis report on China's esports and gaming industry, which was released by Chinese consulting firm Intelligence Research Group, shows that the annual registration growth rate of China's gaming-related enterprises has fluctuated upward in the past ten years, and the number of new gaming-related firms in China exceeded 65,000 in 2019, the largest number of new additions in history.
The report also says that new gaming companies in 2020 exceed 58,000. By 2020, there are more than 280,000 game-related enterprises in China.
Chinese game industry is highly concentrated, and Tencent's game business, Tencent Games, holds half of the industry, the consulting firm says in the report. According to the data of Analysys International, in the first half of 2020, Tencent Games and NetEase Games occupied the first and second place in the industry with 54.46% and 15.29% market shares respectively.
Meanwhile, Tencent Games is also the company with the largest revenue in China's game industry, achieving revenue of 156.1 billion yuan in 2020, 101.5 billion yuan higher than that of Netease Games, which is in second place.
The article in the Economic Information Daily, a central-level state media outlet in China, sparked concerns among investors about changes in regulatory policies in the video game industry.
China International Capital Corporation Limited (CICC), a leading Chinese investment bank, commented on this and saying, "Looking back at the regulatory history of the game industry, we believe that the game industry has been continuously under state-level regulation in the past, mainly by the National Press and Publication Administration (NPPA). The regulation has never been absent and has shown a regular feature. China has now established a comprehensive regulatory system from products to users to operations. "
Chen Shouhong, the founder of the investment information platform Gelonghui, made the following comment, "According to the logic that the game is spiritual opium, the first one that should be knocked down is the China National Tobacco Corporation (CNTC). To pick a thorn in the side, no industry is white and flawless. If you have been holding a hammer in your hand, everything in your eyes will look like nails. "
"The key is, this unpredictable, uncontrollable tangible hand reaches out frequently, whether doing business or making investments, the most important foundation of the market -- stable expectations -- will be gone. The inevitable result of the disappearance of such expectations is an alarming wind, and everyone is at risk. In economics, it means the birth of a black hole in wealth. We may really need to seriously rethink whether to put down the hammer first," he added.
Just at the 2021 edition of China Digital Entertainment Expo and Conference (ChinaJoy) on July 29, Yang Fang, deputy director of the Publishing Bureau of the Chinese Communist Party Publicity Department, pointed out in her speech that protecting the healthy growth of young people is a regulatory priority for the game industry to enhance safety awareness. She noted that the state will focus on regulating the game industry to provide healthy and beneficial content and make every effort to do well in anti-addiction work.
The tightening of regulation of the game industry has been preceded by warning signals from the highest level. In March, when Chinese President Xi Jinping visited members of the education, medical and health sectors attending the fourth session of the 13th National Committee of the Chinese People's Political Consultative Conference (CPPCC), a member from Beijing who has been involved in elementary school education for many years talked about the current problem of "students being addicted to online games", which has caused great concern among students' parents and society.
Xi said, "It's not only the problem of being addicted to online games, but there are also a lot of dirty things on the Internet. Minors develop immaturely in their psychology and are susceptible to adverse influences. These problems are social and it requires the joint efforts of all aspects of society and all relevant departments to study and solve them."
In the article, the Economic Information Daily quoted relevant people as suggesting that in addition to requiring platforms to enhance their sense of social responsibility, not to simply chase interests, improve the anti-addiction system for minors, and improve the platform content review mechanism to reduce bad information from entering minors, the strength of relevant state-based penalties should be synchronized to keep up.
Later in the afternoon, the Economic Information Daily took the initiative to remove the relevant reports from its WeChat official account and website, and Xinhua, Wall Street Insight, and other media that reprinted the article also dropped it.
After lunch break, Tencent, NetEase, and other Chinese gaming stocks once rebounded. But as the market impact has spread conduction, the stocks and the board overall remained down.
