Can Tencent Catch A Break By Improving Addiction-Prevention System on Games?

Chinese tech company Tencent Holdings has developed an addiction-prevention system for its gaming products to assist in preventing children from becoming addicted to video games, particularly on mobile devices. With the industry facing more government scrutiny than ever, the company has evolved a “healthy gaming” strategy that will actually limit play time to a certain number of minutes or hours per day and use facial recognition software to boost ID-check security measures.

These strategies are actually already in place for Tencent Holding’s most popular game—Honour of Kings—but they are expanding the program to nine other mobile games over the course of the next several months.  By next year, they hope to further expand the program to cover every game in their catalog, according to a post on the company’s official WeChat account.

This move, of course, is an attempt to assuage calls from the Chinese government to tighten controls on combat gaming addiction among young people.  The government is also concerned over the increasing number of near-sightedness amount children and young people, which is often regarded as a consequence of too much video game playing. Actually, in August, a state announcement called for the national publishing regulator to limit the number of online video games that can be released, as well as to limit how long young children in China can play these games.

You may not be aware of this but Tencent is actually the largest gaming company in the world in terms of revenue.  That means they have a massive following and is probably why they are such a big target for Chinese authorities, who have been very sparing with their approvals of any new Tencent games.

The current count of new Tencent approvals, since March, is zero.

Without the ability to incorporate in-app purchases, Tencent has not been able to earn any revenue from some of its most popular titles. One of these titles might just be the biggest game in the world, today, a little online game known as PlayerUnknown’s Battlegrounds Mobile.  CLSA estimates this game could generate upwards of $1 billion in annual revenue if they could simply get a monetization license.

All in all, then, Tencent shares have fallen nearly 30 percent over the past year. This drop has brought Tencent’s market value down $138 billion.  At the close of day on Monday, Tencent share value was down 3.7 percent.