Tencent Holdings (HKEX: 0700; OTC: TCEHY) is facing a lawsuit from a Chinese activist group for “inappropriate” content for kids in its massively popular mobile game, Honor of Kings.
Beijing Teenagers Law Aid And Research Center has filed with the court on Tuesday against China’s top game developer. This came amid heightened scrutiny by Beijing against the nation’s independent tech conglomerates, with fines imposed for anti-competitive practices.
In the West, some may know the game as Arena of Valor. The Beijing NGO claims, as Reuters reported, the game includes vulgar clothes, tampering with historical figures, and disrespects traditional values. The game also featured a raffle to prolong the time spent playing, it said.
"Game characters' clothing is too revealing, while there is a lot of ... low-taste content that is inappropriate for teenagers on its website and forums,” the activist group stated, as cited by the medium.
On top of the recent crackdown in the tech sector, China has long limited its gaming industry amid growing concerns of myopia among youth and increasing gaming addiction. In November 2019, the nation banned gamers under 18 from playing online between 10 p.m. and 8 a.m. On weekdays, minors are allowed three hours daily gaming time; on weekends – just 90 minutes. Spending limits are also in place, with up to 400 yuan monthly.
More recently, Beijing amended its law protecting minors, which came into effect on June 1, on International Children's Day, and is used by Beijing Teenagers Law Aid in the case against Tencent. The new law prohibits parents from encouraging kids to smoke e-cigarettes and gamble, among other things. Regarding games, the curfew has not changed, but stricter identity authentication to ensure the time limits has taken place.
Tencent has been slapped with a number of fines over the past few months for monopoly practices and failing to disclose certain acquisitions. Reuters said, citing sources, that a new fine is being prepared that may reach $1 billion.
The conglomerate holds stakes across various industries and backs a number of up-and-coming startups, a few of which have been listed or are seeking U.S. listings. The government’s crackdown is said to delay the merger of China’s two top game livestreaming platforms, Huya Inc. (NYSE: HUYA) and DouYu International Holdings Ltd. (Nasdaq: DOYU). The merger has been planned since 2020 and was expected to take place in the first half of 2021.
Tencent is today China’s largest gaming corporation, followed by NetEase, Kingsoft, Changyou, and Shanda. In 2020, according to Research and Markets, China’s gaming market was valued at $58 billion and is expected to reach $86 Billion by 2027.