Published: Fri, August 17, 2018
Industry | By Kenny Hampton

'Monster Hunter' on hold as China hits pause on new video games

'Monster Hunter' on hold as China hits pause on new video games

"The miss, however, was driven purely by regulatory delays to game approvals, meaning the long-term story for Tencent may well remain intact". The iShares China Large-Cap ETF shed 3.8% to a 13-month low, as 49 of the 50 components lost ground. Tencent shares fell 3.6 percent in Hong Kong trading before its New York-traded ADRs plunged as much as 10 percent.

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The world's largest videogame company said its net income last quarter fell 2% from a year ago-the first such year-over-year decline it has recorded since 2005. Social and other advertising revenues rose 55 percent to CNY9.4 billion, driven by growth in its messaging and third-party payment WeChat app, social media WeChat moments app, mini apps, mobile advertising alliance and Apple iWatch rival QQ Watch. Sales were 73.7 billion yuan, missing analyst estimates.

Lau said "a lot of games have not been approved", which confirmed a South China Morning Post report last week that the State Administration of Radio and Television (SART) - the body in charge of monitoring games and other entertainment content - has not given licences to any new games since March 28. This could change for better or for worse when leadership is re-established, but the destabilisation of the video game market increasingly calls for the country to gain control.

"The gaming fundamental is actually as strong as it has been", Lau said, pointing to growing user numbers and downloads for the company's games.

Gaming revenue dropped 12 percent from the first quarter, which the company said reflected a user shift into non-monetised games, the timing of new game launches and "weaker seasonality".

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Chinese regulators have frozen approval of game licenses, Bloomberg reported on August 15, citing people familiar with the matter. That represented the slowest quarterly revenue growth since the second quarter of 2015. Tencent just suffered a profit drop (the first after a decade of nonstop growth) and smaller companies can not get their names out.

Tencent delivered disappointing second quarter results as the Chinese technology giant struggles with regulatory hurdles for its gaming business. Mobile gaming revenue jumped 19% year-over-year, making for a sequential decline of 19%.

"China's whole online gaming industry is having some issues - not only because of regulation but also because Chinese gamers are becoming more mature and selective".

The pace of the company's investment is also slowing.

Bureaucratic reshuffling at the top levels of China's government made it hard for the company to get the licensing required to make money on new video games.

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