China ends $50 billion video game fest

A child plays Tencent’s ‘Honor of Kings’ game at his home in Dezhou, Shandong province, China July 2, 2017. Picture taken July 2, 2017. REUTERS/Stringer

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HONG KONG, July 22 (Reuters Breakingviews) – Chinese regulators are spoiling the country’s video game party. Industry revenue fell 1.8% year-on-year to $22 billion in the six months to June, official figures showed, the first-ever decline Read more. This is likely temporary, as new game approvals gradually resume. Yet heightened surveillance across the industry, driven by concerns about online addiction and myopia, will continue to dampen growth.

The contraction underscores the consequences of Beijing’s regulatory assault on the sector. Along with a months-long freeze on approvals, restrictions on how much time and money young people can spend on gaming have come into effect. The population of gamers in what was once the world’s largest market is declining, according to official estimates. Newzoo Industry Tracker account U.S. gaming spending will exceed China’s $50.2 billion this year.

Giants like the $410 billion Tencent (0700.HK) have existing titles to fall back on, as well as international markets like Southeast Asia. Nevertheless, China Renaissance analysts predict overall annual video game revenue growth of only 6% over the next two years. The party is over. (By Robyn Mak)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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