Chinese internet giant Tencent insists its profits won’t take a hit from a decision to limit the time children can play one of its most popular games.
Access to Honour of Kings is now restricted to one hour a day for children aged under 12 and two hours for children between 12 and 18.
The limits were put in place after the government-owned People’s Daily labelled the game “poison” and called for more regulations.
What is Honour of Kings?
Also translated as Kings of Glory, Honour of Kings is a fantasy role-playing “multiplayer online battle arena” game.
It’s very similar to another Tencent game, League of Legends, which is the world’s most popular PC game.
There are a few differences. Unlike League of Legends, it’s based on Chinese historical characters. It’s also specifically designed for play on a mobile platform.
This is a key reason it’s so popular in China, where many gamers don’t have access to a games console or PC at home.
How does it make money?
The app is free to download, but players pay to upgrade their characters or costumes to help them advance to the next level.
Estimates about how much an average player spends vary from about $1.50 to $6 a month.
That doesn’t sound like much, but it all adds up in a game with more than 50 million monthly active users.
Why are people worried about it?
Parents and teachers worry that children are becoming addicted to the game.
While hand-wringing over gaming is nothing new, Honour of Kings has drawn particular scorn from the government-owned People’s Daily newspaper, which called it “poison” and a “drug” that harms teenagers.
It also called for tighter regulatory controls of online games.
Tencent’s revenue model depends on getting existing gamers to spend more time on their products.
Its last annual report says its strategy is to turn casual gamers into “midcore” or “hardcore” gamers.
How important is Honour of Kings to Tencent?
Tencent made $7.2bn in the first quarter of this year, and more than half – about $3.9bn – came from gaming.
Two titles dominate its catalogue. League of Legends is its biggest title globally, but in China Honour of Kings is its highest grossing mobile game.
Chinese gaming industry database CNG estimates the game generated about $810.5m in the first quarter of this year. That would equate to about 11% of its total revenue.
Could tougher regulations matter?
Tencent is a huge company. Besides gaming it’s in payment services, social media and messaging apps (notably the phenomenally successful WeChat).
The great majority of Tencent’s business is in China, so it’s vulnerable to regulatory changes there.
This could add to investor anxiety. After Tencent brought in the time limits, its shares fell 4%, wiping $12bn off its market value. But shares have rebounded slightly since then.
As a whole, the company has grown more than 40% over the past year, and it says the limits won’t have much impact on the bottom line, because children under 12 are only a small part of its user base.