Chinese regulators will temporarily freeze approvals for all new online games, which will be a blow to Tencent Holdings Ltd. and Netease Inc., the South China Morning Post reported.
Officials from the Communist Party’s advertising department and the industry regulator disclosed their decision to executives from Tencent and Netease called for a meeting on Wednesday, the newspaper reported, citing a person briefed on the matter. Game approvals have been put on hold while the government determines how to reduce the number of titles on the market, the Post said citing a second person briefed on the discussion.
READ ALSO: China asks game companies Tencent and Netease to end their “lonely” focus on profit
Tencent and Netease conducted a liquidation of Chinese stocks in Hong Kong after news service Xinhua reported that officials invited game companies to the meeting to discuss increased industry surveillance and the need reduce profits. Xi Jinping’s administration is leading a campaign to fight underage addiction, reduce growing spending on virtual items, and encourage young people to pursue more productive hobbies. But the official news agency made no mention of the suspension of game approvals.
In 2018, China froze game monetization license approvals for months, in part to fight addiction and myopia in children. This spurred Tencent’s first profit decline in at least a decade and helped erase around $ 200 billion from its market value at one point. Representatives for Tencent and Netease did not immediately respond to requests for comment.