China Blocks Monster Hunter

19 August, 2018, 13:48 | Author: Julian Harrison
  • A weaker yuan makes Chinese exports cheaper cushioning the impact of the tariffs imposed by US President Donald Trump

The report also highlighted the steady number of daily active users for its mobile games despite a drop in monetization, citing how Arena of Valor has more than 13 million DAUs and generated over $30 million per month outside China for the first half of the financial year.

The company's second quarter net profit fell 2 percent from the same period a year earlier to $2.7 billion. The critics believed that the game is quite addictive, and hence, the company had to add in-game spending limits for underage account holders. "This is something which is a little bit out of (our) control".

The decision has battered shares of market leaders like Tencent, which have plunged since the company was ordered to remove hit game "Monster Hunter: World" from sale only days after its debut. Mobile gaming revenue dropped 19 per cent from the first quarter.

"The results were really bad", said Benjamin Wu, a Shanghai-based analyst with consultancy Pacific Epoch.

Even if the regulators resume approvals immediately, the typical process takes about two to three months, signaling potential weakness in the third quarter for companies like Tencent. Bank of America Merrill Lynch analysts downgraded their ratings on the company's bonds and said they have higher regulatory risk than rival Alibaba Group Holding Ltd.

Of that, the revenue from PC games was CNY31.5 billion, a first-time decline, while mobile game income rose 13 percent from a year earlier, but this was a big drop from last year's increase of almost 50 percent.




Longer-term, Tencent still commands a powerful asset in WeChat, the ubiquitous messaging service that underpins its gaming and ads business. Advertising revenue jumped 39 per cent, while video subscription numbers doubled.

Still, it's rare for company officials to publicly suggest Beijing is to blame for anything, which is why it stood out that Tencent called out government actions for its profit weakness, said Asia Society senior fellow Isaac Stone Fish. It has resulted in new game licenses being frozen until the restructuring is complete. Although gaming revenue made up 40 percent of the revenue, it is also the business line that is causing the financial woes.

Tencent's core business, communications, is likewise hitting growth ceilings. "The deeper implication is that games will be slowing down and they need to find new areas of growth".

Revenue rose 30 percent to 73.68 billion yuan (8.4 billion pounds), lagging 16 analysts' average estimate of 77.5 billion yuan (8.8 billion pounds).

Procedures for games approvals in China were already complicated enough with watchdogs for media publication, cyberspace and copyright as well as ministries for culture and information technology all being part of the process.

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