Tencent Holdings joined a rally in Asian gaming stocks Thursday after China approved its latest clutch of blockbuster titles, reinforcing hopes Beijing is easing a crackdown on the world’s largest mobile gaming arena.
Tencent was the top performer on the Hang Seng Tech Index on Thursday, gaining as much as 3% after winning nods for half a dozen titles including e-sports favourite Valorant and Pokemon Unite, developed in tandem with Nintendo. It was only the second time the Chinese tech giant gained licences for blockbuster titles since Beijing resumed issuing them in April.
The latest round of approvals also included several Korean games, suggesting regulators are relaxing their stance on foreign entertainment. Netmarble surged as much as 24% in Seoul — the most on record — after a Ni No Kuni title won approval, driving gains of between 5% and 12% in rival developers including Krafton and Nexon in Tokyo.
“It was the first time since 2016 that Korean online games got approvals on a big scale,” Ahn Jaemin, an analyst at NH Investment & Securities, said in a note. “The resumption of approval will give a positive momentum to the game industry overall.”
Beijing launched a campaign to rein in its tech industry’s growing power in 2021. The subsequent clampdown, which ensnared sectors from e-commerce to fintech and even education over a tumultuous year, spread to online gaming around August 2021.
Regulators introduced stringent measures, such as capping play time for minors to a mere three hours a week, and imposed other requirements aimed at curbing addiction.
Growth at industry leader Tencent evaporated as the company found itself struggling to wring new revenue from ageing cash cows such as Honour of Kings. This month, co-founder Pony Ma upbraided Tencent’s employees for slacking on the job and lacking urgency, a rare show of frustration for the billionaire.
Ma’s outburst unnerved observers accustomed to his even-keeled handling of Asia’s biggest social media and gaming company, raising concerns Tencent was in for another tough year.
Still, during an analyst call in November, a Tencent executive expressed confidence in winning approval to release more major games soon. This month, China removed its remaining Covid Zero curbs, spurring optimism the world’s second largest economy will rebound in 2023. — Youkyung Lee and Sarah Zheng, (c) 2022 Bloomberg LP