Tencent loses US$17.5 billion in market value after People’s Daily describes its game as ‘poison’
Tencent Holdings, the operator of China’s dominant social network and publisher of the world’s most popular role-playing mobile game, plunged in Hong Kong trading, after a commentary in the People’s Daily newspaper described its Honour of Kings game as “poison” and “drug” that’s harming teenagers.
Tencent shares plunged as much as 5.1 per cent on the Hong Kong exchange, or by HK$14.40, to HK$266.40 per share, wiping out nearly HK$136 billion (US$17.5 billion) in market value for Asia’s second-largest company.
``Investors are quite concerned about Tencent’s profitability, given a large part of its revenue comes from the game,’’ said Wei Wei, a trader at Huaxi Securities. ``The surveillance from the government on the game industry will very probably be intensified going forward as we hear the voice from the People’s Daily in this event.’’
Honour of Kings, a fantasy role-playing game based on Chinese historical characters, has more than 200 million players, making it the world’s most popular game of its kind. Its popularity has compelled teachers and parent to complain that children are too addicted to the game.
The game has more than 80 million daily active users, which means one in every 17 Chinese person is playing the game at any time, according to a commentary in the People’s Daily, the Chinese Communist Party’s mouthpiece newspaper.
A few tragic examples of overindulgence in the game were listed in thearticle: a 13-year-old jumping off a building after being scolded for playing the game, and a 17 year old who almost died of cerebral infarction after playing non-stop for 40 hours.
Tencent said on its official Wechat account on Tuesday that the design of the game complies with the Chinese government’s rules, and that it will take on its social responsibility accordingly, since the game has already become popular nationwide.
Honour of Kings’ generated more than 5.5 billion yuan (US$809 million) in first-quarter revenue, according to an estimate by Chinese gaming industry database CNG. That accounted for 43 per cent of the 12.9 billion yuan of revenue that Tencent earned from smartphone games in the same period.
Tencent also said it would upgrade a parental control platform to make it easier for parents to monitor their children’s gaming account activities, and will step up the requirement of real-name registration for all users.
China is the world’s largest gaming market by revenue, and is expected to make up about a quarter of global game sales in 2017, according to research firm NewZoo.