Beginning September 1, kids in China will be limited to just three hours of mobile gameplay per week. The country is stepping up previous restrictions, which had limited playtime by minors to 90 minutes per day.
China's National Press and Publication Administration announced the new rules, describing mobile gaming as detrimental to youths' physical and mental well-being, echoing language heard in state press earlier this month calling mobile gaming "spiritual opium."
Some analysts suspect the impact on the bottom line of gaming giants like Tencent (OTC: TCEHY) and NetEase (NASDAQ: NTES) to be minimal. Tencent reported that only 2.6% of gross gaming receipts came from users under 16 in the second quarter. In fact, the company had already taken steps to limit mobile gaming by minors ahead of the announcement.
"Since 2017, Tencent has explored and applied various new technologies and functions for the protection of minors," the company said in a statement. "That will continue, as Tencent strictly abides by and actively implements the latest requirements from Chinese authorities."
In addition to the new time limits, users will have to register on mobile gaming platforms under their real names. Gaming platforms must also link to state-run resources for gaming addiction, and regulators will have stepped up powers to ensure compliance, among other things.
The move comes as Beijing seeks to reign in excesses at its most prominent tech companies. Top players in online tutoring, ridesharing, e-commerce, and other bleeding-edge industries have been subject to a slew of anti-monopoly, data protection, and social engineering policies over the past year. Said policies have resulted in trillions in market cap fleeing from Chinese tech.
On the day of the announcement, Beijing sent signals that further policy changes were in the pipeline. While at a top-level meeting, President Xi Jinping remarked that regulators' efforts thus far have been successful and that further anti-monopoly measures were necessary for continued growth. However, President Xi, perhaps to assuage investors, also vowed for more "transparency and predictability" when it comes to any policy shifts in the future.
"I thought regulatory measures would take a break gradually, but it's not stopping at all," Steven Leung, executive director at UOB Kay Hian (Hong Kong) Ltd, told Bloomberg. "It will hurt the nascent tech rebound for sure."
In July, regulators all but cut the heels out from under China's online tutoring industry. According to Bloomberg, the force of that regulatory blitz spurred a broad sell-off that saw the Chinese tech sector lose 1.5 trillion in value over the course of just three days. Investor's reaction to the new mobile gaming rules has not nearly been as sharp, as most of companies had already priced in further restrictions.
At the time of this writing, both Tencent and NetEase have more than erased any losses they incurred after the announcement. At the time of this writing, Tencent is up from a low of $57.50 on Monday to $64.74 today. NetEase meanwhile is up to $96.54 after trading at $84.59 on Monday.