Tencent and NetEase lost $80 billion because of China's new move

According to VGC , the two giants Tencent and NetEase saw nearly $80 billion of their market value wiped out on December 22, a move that came after Chinese regulators announced new regulations to limit investments in online games.

Specifically, the National Press and Publication Administration of China announced a draft of new regulations that will have a strong impact on the operations of online game publishers. According to Reuters, the most notable content in this draft includes:

• Gift giving is prohibited for daily login, first deposit or consecutive deposit.
• Limit the amount of money a player can deposit into a game account.

Tencent and NetEase saw their market value 'evaporate' by $80 billion

Although the regulation is still subject to revision and will not officially take effect until next year, the announcement sent shares of Tencent and NetEase, two giants in the Chinese gaming industry, plummeting. Tencent's shares fell 16%, while NetEase's shares 'evaporated' 25%.

"Removing incentives could lead to a decline in daily active players and in-app revenue, and force publishers to completely change the design and monetization of their games," said Morningstar analyst Ivan Su.

This isn’t China’s first move to clamp down on the gaming industry. In 2021, the government imposed strict gaming time limits on minors and halted new game approvals amid concerns about gaming addiction in the country. New game approvals resumed last year, and the latest draft regulations include a clause requiring regulators to process approvals within 60 days.

China’s tightening measures have raised big questions about the future of the online gaming market, which has brought huge revenue to domestic companies. Game publishers will face great challenges in adapting to new regulations and finding sustainable monetization strategies in the context of limited player incentives and deposit restrictions.

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