China has the most prominent gaming industry in the world, with about 650 million users. China’s gaming sector gathered about $45 billion in revenue last year. The industry is facing renewed scrutiny as the government introduces draft rules restricting playtime and spending on online games. The decision comes after a trend of regulatory actions that started in 2021, targeting addiction to gaming among minors. The recent announcement triggered an $80 billion market selloff, raising concerns among gaming companies and investors.
The draft rules impacted significant market reaction, with substantial decline experiences in major gaming stocks like NetEase, Tencent, and Bilibili. For instance, Tencent, a global gaming industry and a leader in the market, faced a 16% drop in share price, wiping out billions in market value. Bilibili, a popular gaming platform, also experienced a 14% decline, while NetEase tanked 28%. The total loss exceeded $80 billion, leading investors to fear a broader crackdown in the tech sector.
