Shenzhen-based Chinese behemoth Tencent has had a hell of a recent few months. First, the quarterly profits of the company didn’t increase for the first time in 13 years. When some saw the maturity of a company, others were quick to point out the recent massive crackdown led by the Chinese ruling party on all gaming activities that pertain or even hint at gambling.
Tencent, Out of the Fire and into the Frying Pan
Be that as it may, Tencent had a raucous few months. Estimated $20 billion of its value was written off in an unprecedented move on the part of Chinese government to curb myopia, urging developers and publishers to work out solutions and effectively restrict the time adolescent can spend playing games.
The move has been successful, because Tencent is effectively scooping up data on its Honour of Kings players, logging in their personal details in a database to use in a future move to restrict gamers’ time in front of a device.
The latest report comes from Reuters. The newspaper first broke the news that Tencent had conceded to shut down one of its longest-running products, the Texas Hold’em video poker, as China continues to target iGaming products.
China is nowhere near its 2015 crackdown levels whereby the government went after Asia’s hottest gambling spot as part of President Xi Jinping’s anti-corruption campaign to purge the party from corrupt members. Many western brands were hit during what was described as “illegal practices in Macau’s gambling practices”. Things have been clearly getting better, but while the United States and China are at daggers drawn, the likelihood of a repeat of the scenario of several years back is growing by the day.
Meanwhile, Tencent has already been on the receiving end of China’s intransigence insofar as certain gaming products are concerned. Insofar as the Texas Hold’em video game is concerned, though, the company will initiate gradual shut downs of its servers. The game will cease to exist on September 25 when the plug will be finally pulled.
Tencent Regulatory Woes Keep Piling On
China has long taken a dim view on games that appear to be reminiscent of any form of gambling. As per the Reuters article, a Tencent insider, who had requested to remain anonymous, said that the company’s gaming division was undergoing under certain pressure to adjust their products so that they are more acceptable to the established “socialist values” of the party.
More specifically, the unnamed person said that the China’s government was particularly wary of any associations between card games and even chess and gambling and therefore was mulling the ban of such products.
Tencent will have to operate in this new context where the bulk of its products may come under continuous scrutiny. The question remains, then, should the company continue to pursue China as a viable market or decide to adopt a more Western-oriented approach exporting to other venues.
Each case has its risks and none seems safe on the face of it. Tencent has indeed come to a point where it may need to adapt its business model.