Curbs will not affect gaming shares

PUBLISHED : Wednesday, 11 April, 2007, 12:00am
UPDATED : Wednesday, 11 April, 2007, 12:00am


Related topics

Central government measures to curb addiction to online gaming had a limited impact on the stock performance of internet-related gaming companies such as Netease, Shanda, The9 and Tencent as the new rule was largely in line with market expectations, according to an analyst.

Shares of Shanda rose 0.59 per cent in the mainland on Monday, and Netease, which owns the country's most popular game, Fantasy Westward Journey, gained 0.46 per cent, as the Shanghai A-Share Index jumped 2.38 per cent. Tencent rose 4.3 per cent in Hong Kong yesterday as trading resumed after the holiday.

The9 shares rose 16.4 per cent on Monday on rumours that Electronic Arts of the United States had agreed to buy a 19 per cent stake for about US$200 million. A spokesman for Electronic Arts later denied the speculation. The9 spokeswoman Dahlia Wei said the firm did not comment on rumours.

The new rules, announced jointly by eight government ministries on Monday, stated that teenage gamers would get only 50 per cent of their game score if they play for more than three hours. From the fifth hour, gamers will get no score.

Gamers will also be required to register using their real names and identity card numbers, which will indicate if they are under the age of 18. All game companies must implement such systems in their games from April 15 to June 15, and fully launch the curbs from July 15.

'The impact on stocks is neutral, as the final version of the anti-addiction system is similar to earlier market expectations,' said Dick Wei, a China internet analyst at JP Morgan.

As the new rules had been expected, listed game companies had already enacted them on some of their game servers, Mr Wei said.

'The new rules are implemented mainly to address the negative publicity in China, rather than hurting the growth of the industry,' he said. 'This contrasts with the wireless value-added industry, where customer complaints have led to government's cleansing of the industry.'

The new rules are also expected to have a limited impact to game company operations.

'The rules only apply to teenagers and not adults. According to a 2006 IDC survey, only 14 per cent of gamers are under 18 years old,' Mr Wei said.

China first announced the restrictions in August 2005, after the deaths of several children were blamed on video games. A report released by the China National Children's Centre claimed that 13 per cent of Chinese internet users under the age of 18 were addicted to games.