Tencent shares slide after “Monster Hunter: World” axed in China

A pedestrian walks past Tencent Holdings Ltd.’s new under construction headquarters in Shenzhen, China. (Bloomberg pic)

BEIJING/HONG KONG: Tencent Holdings Ltd saw its shares tumble on Tuesday amid concern of a hit to the Chinese technology firm’s gaming revenue after regulators blocked the sale of one of its blockbuster titles.

Analysts had expected “Monster Hunter: World”, developed by Japan’s Capcom Co Ltd, to be one of 2018’s biggest launches for Tencent, which licensed the game to sell to personal computer users on its WeGame platform.

However the game, where players hunt fearsome creatures, was pulled from the platform on Monday less than a week after its August 8 release. Tencent in a statement said regulators had received a large number of complaints about the content of the game, which has sold over eight million copies worldwide.

Shares in Tencent, which is set to report half-year earnings on Wednesday, slid more than 3% in morning trade, against a 0.9% fall in the benchmark Hang Seng share price index .

“People are very concerned about Tencent in the short-term at the moment,” said Douglas Morton, head of research in Asia at Northern Trust Capital.

He said the block follows concern over Tencent’s ability to monetise popular game PlayerUnknown Battleground (PUBG), which it was forced to alter last year after the regulator branded it too gory and violent. However, it has yet to receive a licence that would allow it to monetise the updated game.

Industry executives have said many games in China, and not just those belonging to Tencent, have since March faced a hiatus in licence approvals after China revamped its content regulatory body and divided its powerful State Administration of Press, Publication, Radio, Film and Television earlier this year.

“The key here is, not only PUBG, but no games are able to get licences now,” a person from Tencent told Reuters on Tuesday on condition of anonymity due to the sensitivity of the matter.

Morton said he remained bullish on Tencent shares and that regulatory risk in China versus the rest of the global gaming market has always been there.

“For us this is a medium-to-longer-term holding with a history of good investment,” he said. “I think the monetisation will happen, it is just a matter of time.”

Tencent also said players who purchased “Monster Hunter: World” were entitled to a full refund until August 20. They could choose to continue playing but there would be no guarantee the service would continue, it said.