Tencent is starting to feel the pain of China's tech crackdown

In its first earnings report since China imposed new restrictions on how lengthy minors can play online video video games, the firm posted an enormous dip in utilization and billings from youngsters and youngsters.

Tencent's income was 142.4 billion yuan ($22.2 billion) throughout the three months ended September, a 13% enhance in contrast to the identical interval final yr. But that pales compared to progress charges of greater than 25% it has posted in earlier years. Profit rose simply 3% year-on-year to 39.5 billion yuan ($6.2 billion).

Tencent has lately rolled out new measures, together with upgrading its screening system to determine and clamp down on grownup accounts which may be misused by minors, in accordance to the firm's president, Martin Lau. Its efforts seem to be working: In September, the first month that Tencent's new measures took impact, customers beneath the age of 18 accounted for simply 0.7% of time spent on the firm's video games in China. That's in contrast with 6.4% in the identical interval final yr, in accordance to Lau.

The 'new regular'

Tencent — which additionally owns WeChat, the ubiquitous tremendous app in China that permits customers to do every little thing from ship messages to pay payments — has lengthy been one of China's blue-chip shares.He now tasks that Tencent's promoting income may see a slowdown in progress, notably as some of its purchasers cope with headwinds of their very own."Major automobile advertisers [have] cut spending because of disruptions in chip supply," Yang wrote. "[And] real estate, online gaming and online education advertisers continue to cut spending because of [an] uncertain regulatory landscape."Tencent shares slipped almost 3% in Hong Kong on Thursday, earlier than paring some losses to shut down 1.2%. The firm's inventory has dropped virtually 17% to this point this yr, wiping $117 billion off the firm's market worth.Asked about the prospect of a broader clampdown, Lau mentioned Wednesday that the firm believed that "stricter regulation is a new normal for the entire industry.""[But] we expect once the industry has really complied with the new regulations, have made all the adjustments ... then the impact on the industry will be less and less over time," he instructed analysts.— Diksha Madhok contributed to this text.