Matthew Kanterman, a senior analyst at Bloomberg Intelligence, said the latest restrictions placed on the industry had been “harsher than expected” though their impact was less severe than the crackdown in 2018 when Beijing halted the approval process for new games entering the country for nearly nine months.

“Tencent, NetEase and Chinese online games peers may face less regulatory pressure and impacts than in the 2018 crackdown … although the play-time restrictions for minors are harsher than the industry hoped, game companies have been addressing concerns with systems which can be quickly rolled out for modestly higher compliance costs,” Kanterman said.

Honour of Kings, which has made more than US$9.4 billion in revenue since its launch in 2015 according to app-tracking firm SensorTower, said on Wednesday that it will ban young gamers from playing except during the time window specified by the government. TJ Sports said in a post on social media that it will impose an age limit across all its tournaments to comply with the new requirements.

The impact of the unprecedented measure on company revenues may be limited. Tencent said that players under 16 accounted for just 2.6 per cent of its gross gaming receipts in China. Both NetEase and Bilibili said minors contributed around 1 per cent of the company’s gaming revenue.

Still, as the market becomes more regulated and competitive at home, Chinese gaming companies are busy seeking growth outside the country, a phenomenon known as chuhai, or “going overseas”. Charles Zhaoxuan Yang, chief financial officer of China’s second largest gaming company, NetEase, said on Tuesday that NetEase has already set up gaming studios in Canada, Japan and Europe to develop games.

Tencent has also been expanding rapidly overseas, setting up studios in Montreal, Los Angeles and Seattle.