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Chinese social media and gaming giant Tencent vowed to further limit minors’ access to video games on Monday, the same day state media’s criticism of the industry spooked investors and caused Chinese game stocks to lose at least $57.6 billion.

Why it matters: Tencent’s announcement is a quick response to an article by state media that compared video games to drugs. 

• The Economic Information Daily, an affiliate of the state news agency Xinhua, called online video games “spiritual opium,” singling out Tencent’s top game “Honor of Kings” as “the most popular video game” among Chinese students. The article was published on Monday morning, pulled in the afternoon, and republished in the evening without those phrases.

Details: Tencent said (in Chinese) in a Monday announcement that it will set stricter limits on minors’ access to games, intensify its crackdown on minors using fake identification to circumvent restrictions, and promote industry-wide systems to prevent gaming addiction. The company also said it will start implementing the new measures in “Honor of Kings” and gradually extend them to other games. 

• On Wednesday, Tencent released new rules that limit underage players’ access to “Honor of Kings.” 
• The rules bar minors from playing the game from 10 p.m. to 8 a.m. Minors will also only be allowed to play one hour a day, and two hours on national holidays, down from previous limits of one and a half hours and three hours, respectively. 
• The new rules also prohibit children under 12 from making any in-game purchases.
• Tencent promised to re-verify suspicious accounts and crackdown on minors using fake identification to play games for longer periods. 
• Tencent also said it will encourage other gaming companies to build anti-addiction systems and discuss whether children under 12 should be completely banned from playing video games.

Context: The Economic Information Daily pulled the article on Monday afternoon after major game stocks in China and Hong Kong plunged more than 10%. The company later republished the article without the drug comparison on Monday night. Tencent and NetEase’s stock prices fell by 6% and 8%, respectively, and CMGE Technology, a mobile game publisher, lost 13%. 

• Chinese state media has consistently lashed out at video games over the past few years. In July 2017, multiple state-owned media companies, including People’s Daily, state broadcaster CCTV, and Xinhua News Agency, published op-eds criticizing video games and gaming companies for their bad influence on Chinese school children.
• Despite official pushback, the gaming industry has maintained growth in the past five years. The market reached RMB 136.6 billion ($ 21.1 billion) in 2020, according to CGIGC, a state-affiliated game publishing authority. In early 2018, Chinese officials started an almost year-long freeze on online game approval.