China has announced new plans to clamp down on the online gaming industry, sending shares of tech giants including Tencent tumbling, AFP reported.
The new restrictions, published online by the regulator, aim to curb the in-game purchase of gaming products and compulsive gaming behavior.
After the news, Tencent lost more than 10% of its shares in Hong Kong, and competitor Netease more than 20%.
Beijing first cracked down on the gaming sector in 2021 as part of a sweeping crackdown on big tech, including a strict limit on the amount of time children can spend playing online games.
The end of the process to freeze gambling licenses has raised hopes that the focus on the industry has weakened.
But the draft regulations announced will introduce limits on in-game wallet reloads and remove features designed to increase playtime, such as daily login rewards.
Pop-ups warning users of "unreasonable" gaming behavior will also need to be introduced.
The bill also reaffirms the ban on "prohibited online game content that threatens national unity" and "threatens national security or harms national reputation and interests."
Tencent is the global industry leader in terms of revenue, dominating the Asian market and investing in game studios around the world.
Even as the company's stock tumbled, some independent game studios said the regulations could provide new opportunities.
Cheng Gong, CEO of Chengdu-based Hanjia Songshu, said studios that focus more on innovation and high-quality user experience can benefit.
"Everyone is focused on getting players to load more. Only those with the highest revenue can afford to spend more money on advertising and therefore will get more players loading in return," he pointed out. /BGNES
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