The most valuable gaming firm in China is having trouble with the domestic video game market's constraints. There were neither high hopes among investors nor intense anticipation among gamers that another blockbuster title was on the way when Tencent secured its first game approval in China in more than a year last week.
The IT giant had previously admitted that Honor of Kings, a fantasy multiplayer mobile game in which players kill opponents to gain abilities and gold, and win by demolishing the enemy's towers, was a much bigger moneymaker than Defence of Health.
In 2021, Tencent announced that Defence of Health, a game where players learn about the human body while fending off viral invasion, would be a part of its “social service” to “advance public health understanding” and “explore more beneficial social values.”
Policy changes & health initiative
The new mobile game was one of 73 that the National Press and Publication Administration approved in the fifth batch of licenses awarded this year. It was created by little-known subsidiary Nanjing Wangdian Technology, which is overseen by officials at Tencent, including co-founder Pony Ma.
After the country's media authority halted game licensing in August 2021 as part of a larger social and economic push to reshape Chinese culture around Communist party goals, the approvals signaled a gradual defrosting for the sector.
Despite the fact that Tencent would make little money from titles like Defence of Health, Daniel Ahmad of Asian video game analyst company Niko Partners predicted that additional “healthy” games that support the objectives of the government's social policy will be allowed.
Beijing has imposed more restrictions on game access in the last year, such as prohibiting children under the age of 18 from playing them for longer than three hours each week. Additionally, it has implemented fresh anti-monopoly regulations for tech firms. This, combined with the more recent economic slowdown, has reduced Tencent's listed valuation by billions of dollars, despite the fact that it continues to be China's most valuable firm by market capitalization.
How it affects Honor of Kings creators?
The company's status has improved significantly thanks to the enormous earnings from gaming. The bulk of the population's omnipresent super app WeChat was integrated with games, giving it fast access to a sizable player base.
However, it appears that this basis has decreased in China, at least among young people. According to recent Niko Partners study, 77% of those under the age of 18 have cut back on the amount of time they spend playing each week, and the total number of child gamers has decreased from 122 million in 2020, when it peaked, to 82.6 million this year.
There is also a risk of harming the attraction of games with increased monitoring of content and games with multiplayer options.
Ryan Li, a former game developer at Tencent, claimed that using these techniques “restricts the enjoyment of many games.” For instance, neither religion nor red blood are allowed in the game.
Value added services, a business category that includes gaming and whose sales are declining in China, accounted for 52% of Tencent's income last year, the lowest percentage in ten years and much below the decade high of 82% in 2014.
