Tencent profits down 13%, blame falls on Chinese regulations

Olivia R. November 21, 2019

PlayerUnknown's Battleground's owner Tencent has reportedly seen a 13% dip in profits this quarter. 

The profit loss is most likely due to China's very strict regulations on the video game market. One of the country's recent regulations prevented Tencent's new title, Perfect World Mobile, from being monetized as had been planned. 

The world's largest gaming firm reported a $2.91 billion (20.38 billion yuan) profit for the third quarter of 2019, which ended in September. Tencent's average is 23.45 billion yuan, according to estimates compiled by Refinitiv. 

This is a much different outcome than people expected, with Tencent projected to increase their revenue by 31% by the end of Quarter 3. Instead, Tencent only managed a growth rate of 25%. 

Chinese government strict gaming laws conflict with Tencent

China has been increasingly strict with online games this year and show no signs of letting up. American game developers often find it difficult to get their games approved by the Chinese government, which results in them losing out on a large population of gamers in China. 

In an interview with Reuters, analyst Benjamin Wu said that American games will have an even harder time getting government approval in the next two quarters. 

The Chinese government has strict rules on violence in games, going so far as to ban the word "kill." Games also cannot have any skeletons, corspes, or blood. The country has become so strict that even previously acceptable alternatives, like green blood, are now banned. 

To get around these regulations, Tencent shut down PUBG Mobile and replaced it with the almost identical Game for Peace. This version of PUBG not only replaces murder with a polite wave goodbye, but also pays tribute to the Chinese air force. 

The game did quite well in China, but might actually have done too well. The government soon decided that minors were playing mobile games overly much, declaring a gaming curfew. The curfew also limited the amount of money minors can spend within an online game, further cutting into publishers' profits.