Tencent posts a surprise profit drop as regulators hobble games

A Tencent sign is seen during the fourth World Internet Conference in Wuzhen

Total revenues for the quarter rose by 30 percent year-on-year to 73.68 billion yuan ($10.65 billion) while online games revenue increased 6 percent to 25.20 billion yuan, according to a filing with the Hong Kong Stock Exchange. In a report via TheStar China has effectively put a temporary ban on all new game releases due to a massive shakeup in the censorship agency.

The company did secure a license to launch and monetise the Monster Hunter game, its president, Martin Lau, told an earnings call on Wednesday. Tencent has also invested in hundreds of tech start-ups from food delivery to bike sharing in hopes of showing ads to and cashing in on the billion people that use its services every day.

The biggest game of the year Fortnite can't even be accessed online at the moment there, and others like Monster Hunter are embroiled in controversy.

Bloomberg reports that sources close to the regulatory company are sure that a restructure of personnel has resulted in a clampdown, with bureaucrats "reluctant to take risks or initiative new steps that could become controversial".

While mobile games such as King of Glory and PlayerUnknown's Battlegrounds, or PUBG, have generated considerable traffic for Tencent, King of Glory has started a downtrend after more than two years of growth.

While there is a "green" process that enables the company to test monetization of games, that won't apply to PUBG because of its sheer scale, Lau said. Things have suddenly come to a halt in recent months, however, as a government change up hasn't seen a new game approved for publishing in over four months.

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Erdogan spoke with German Chancellor Angela Merkel on Wednesday and will speak to French President Emmanuel Macron on Thursday. It was unclear, meanwhile, whether the boycott of American electronics would be enforced in any way.

Tencent was founded in 1998 and while its core business is in gaming, which accounts for about 40 percent of revenue, it also operates China's dominant social network, WeChat, which has more than 1 billion users.

Tencent reportedly created their own mobile game, "Wangzhe Rongyao" in 2015 (later known as "Arena of Valor" in North America), after Riot apparently declining their suggestion to turn League of Legends into a mobile title. "For new game approvals, there will continue to be a drag", she said.

Talking about Tencent, it seems to be that Tencent is already going to a rough patch and now this seems to have stirred a lot of tension for them.

So keeping everything in context these apparent moves by the Chinese government are proving to be, more harmful to the developers and publishers as well as for the Chinese gaming industry, as well. "Insane to think that because of leadership shift on top, the world's biggest gaming companies are in complete disarray".

Last year Tencent was one of several private Internet companies that had to inject funds into a struggling state telecom.

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