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Mobile games in China range from League of Legends to Honor of Kings
Source: Apple Inc.
BEIJING – China’s proposed gaming regulations will hit smaller developers more than larger ones, while also reducing overall online advertising revenue, according to UBS.
Tencent, netease And bilibili Shares fell to their lowest level in more than a year on Friday after China’s National Press and Publications Administration published draft rules on encouraging daily sign-ins for games among other revenue-generating practices. Will stop.
The comment period is open until January 24. Hong Kong’s markets are closed on Monday and Tuesday for Christmas.
“Large game developers or large DAU [daily active user] “Social games should perform better: this is because they have stronger R&D capabilities to increase gamer engagement, reach users, and attract and retain gamers,” said Kenneth Fong, head of China Internet Research, UBS. said in a note.
“With less revenue for online games, the advertising industry will also be affected,” he said. UBS estimates that online games account for about 20% of the online advertising industry’s revenues.
The majority of NetEase’s revenue comes from gaming, and the third quarter release shows that Tencent and Bilibili account for about a fifth of it or even less.
Many other companies develop and publish games in China, although Beijing has made clear in recent years that it would like to restrict game playing, especially among minors.
UBS’s Fong said it is “very common” for online games to encourage daily sign-ins and offer rewards for early in-app purchases. He explained that encouraging users to sign in every day increases engagement and allows the collection of user statistics, which can help developers adjust the game in real time.
However, Fong said it is difficult to measure the financial impact of the proposed regulation because it is unclear whether it would apply only to new games or to existing ones as well.
The National Press and Publication Administration, which regulates the publication of new games, said on Monday it had approved more than 100 new domestic games, after saying on Friday it had approved 40 imported games.
In general, Fong expects newer games to be affected more than older games. “Since online gaming is a very creative industry,” he said, “we believe that game developers will design other means to attract and retain users.”
