Gaming Company Tencent, Questioned Over Honor, Cuts Kids' Play Time

By Alyssa Abkowitz Features Dow Jones Newswires

The world's biggest online gaming company, Tencent Holdings Ltd., is running into problems at home in China as debate rages over how long children play its popular games, the latest imbroglio facing the nation's internet giants amid greater official scrutiny.

Continue Reading Below

Tencent on Tuesday unveiled a new system that limits the time children play its top-grossing mobile game, Honor of Kings, saying on social media that it was taking the lead to roll out policies to prevent gaming addiction. The issue of youngsters playing games has drawn the attention of media and officials after being linked to a spate of suicides and crimes.

Yet state media continued to criticize the company's hit game, which had 50 million daily active users at the end of last year, according to gaming consultancy Niko Partners, and the effect it was having on society. The controversy sent a chill through investors, with the company's stock tumbling 4.1% on Tuesday, dragging down Hong Kong's stock index on which it is the largest constituent.

Analysts warned the limitations on play time will have a negative impact on Tencent, one of Asia's biggest public companies, which pulls in about 30% of its revenues from mobile gaming.

A big chunk of this revenue comes from players under the age of 18, said China Merchants Securities analyst Richard Ko. Players can play up to certain levels for free, but then must pay to continue to more advanced levels. Mr. Ko estimates the limitations will lower Honor of Kings revenues by 5% for the year, impacting Tencent's overall mobile gaming top line by 1.6%.

Tencent didn't immediately respond to requests for comment.

Continue Reading Below

The incident is the latest in a slew affecting China's biggest tech companies, as Beijing increasingly steps up monitoring and policing of their platforms to ensure they don't violate official social policies.

For Tencent, which also operates China's largest social media platform WeChat, and holds other game makers including Supercell Oy of Finland and Riot Games Inc. in its portfolio, the stakes are high as the company is used on a regular basis by the majority of Chinese internet users.

"It's important for Tencent to show their social responsibility," said Kitty Fok, managing director at research firm IDC, who hailed the decision. "They're big enough."

Under the new system, children age 12 and under are limited to one hour a day of play before 9 p.m. and children aged 12 to 18 to two hours a day.

The new system builds on platform Tencent unveiled this spring that connects children's gaming accounts with their parents' accounts, so they can monitor their children's play. The parental oversight platform has nearly 700,000 accounts linked, and a recent upgrade now allows parents to stop all accounts from being played on specific devices.

Despite Tencent's initiatives, China's state-run newspapers, which often serve as the Communist Party's mouthpiece, came down hard on the company.

"When making money and hurting people coexist, we need to be more alarmed," said People's Daily.

An opinion piece by Xinhua News Agency said the game "weakens the kids' self control and worsens their tempers," adding that some children had even stolen their parents' bank cards in order to keep playing the game.

Inside the company, some younger employees who spent time developing and coding the popular game felt it was unfair to be blamed for making the game so successful, according to a Tencent employee familiar with the situation.

"It's not only about the game," the employee said. "It's an issue about undertaking social responsibility and the borders between private enterprises and the government, and how much the government should do and how much we should do."

Fanfan Wang contributed to this article

Write to Alyssa Abkowitz at alyssa.abkowitz@wsj.com

(END) Dow Jones Newswires

July 04, 2017 09:17 ET (13:17 GMT)