Tencent value falls $20 billion after new Chinese regulations

Tencent just lost $20 billion (£16 billion) in market value after new video game and internet regulations came into force in China.

The esports giant saw the major drop after the announcement made by China’s Ministry of Education. The governmental entity based the new strict regulations on a study that shows an increase in myopia cases in China. On a document released by the Ministry of Education, mobile gaming, heavy study loads and lack of exercise are listed as the main reasons for nearsightedness in young people.

China is looking to reduce the amount of time that young people spend playing video games. It’s not the first step the government is taking this year that affects video games companies. Back in April, China stopped authorizing new mobile game releases. The last game approved to enter the Chinese market was Monster Hunter: World. The game was a success but the sales stopped days after the release as the government introduced the new regulations.

Tencent, that partially owns Activision Blizzard and Epic Games, can no longer profit from the mobile version of Player Unknown’s Battleground.

Martin Lau, president at Tencent said: “From a revenue growth perspective, gaming is a key area of weakness. Our biggest game [PUBG Mobile] is not monetisable.”

The Chinese company has taken several hits this year because of the government’s regulations. Tencent registered a profit fall in the first quarterly and has lost over $160 billion (£124 billion) in market value so far in 2018. The company is facing more challenges every day but remains strong in the market. With a current value of $413 billion, Tencent is on its way to becoming Asia’s second-biggest listed company by market capitalisation.

Esports Insider says: Gaming companies and esports leagues keep receiving large investments from third parties. Tencent is the biggest name in gaming at the moment but it is struggling to monetise its main title. China’s attempt to improve its population’s health is costing companies a lot of money.