China crackdown exposes Tencent's gaming addiction

A Tencent sign is seen during the China Digital Entertainment Expo and Conference in Shanghai

Its revenue in the period rose 30 percent, to $11.1 billion.

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.

"At this point in time, we don't have visibility on when exactly the official approval will start yet", said President Martin Lau on a conference call with investors.

With the license freeze in place, the likes of Tencent and other companies that have lucrative partnerships with Western organizations like Blizzard have been seeing an impact on stock values.

China insists on foreign companies working with a Chinese partner to sell their products, meaning many United States and European publishers work with companies such as Tencent to sell games. "The fact that Monster Hunter got taken down shows that even Tencent isn't immune from regulatory crackdowns".

On Aug. 13, "Monster Hunter: World", a game developed by Japan's Capcom and licensed to Tencent, disappeared from the latter's Chinese-language gaming site, WeGame, just days after its launch.

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The government is "the visible hand" behind the country's internet market, where success or failure - especially for media and entertainment companies - is contingent upon its approval, according to the China Internet Report co-authored by the Post, its online tech news site Abacus and San Francisco-based venture capital firm 500 Startups. The company owns Riot Games, producers of League of Legends, a popular game in America and around the world. The longer China's game license freeze continues, the more adverse the potential impact on the companies that occupy the country's now isolated industry. This has halted the growth of the video game industry in the market.

The shift of users to playing these non-monetized games also contributed to a drop in monetization per user, but Tencent adds that the number of daily active users did actually increase year-on-year "at a double-digit rate". Among the US -listed shares of other China-based companies, JD.com Inc.'s slumped 5.1%, iQiyi Inc.'s gave up 2.6%, Huya Inc.'s lost 3.9%, Vipshop Holdings Ltd.'s fell 5.8% and Bilibili Inc.'s declined 6.2%. The majority of this is attributed to Fortnite: Battle Royale and PlayerUnknown's Battlegrounds, as Tencent has been unable to market the desktop versions of either game, and PUBG's mobile variant, without approval.

Talking about Tencent, it seems to be that Tencent is already going to a rough patch and now this seems to have stirred a lot of tension for them. "We're working together toward an exciting future, both for League and our upcoming games (yes "s")".

Tencent's empire extends well outside of China.

The timing is particularly painful for the world's biggest gaming company.

Revenue from Tencent's online advertising business grew 39 percent to CNY14 billion in the second quarter, from a year earlier. Alibaba Group affiliate Ant Financial was initially cheered for providing everyday people and small businesses with easier access to loans and other financial products.

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