Swedish video game companies hit by Chinese gaming ban
In August, China officially implemented a rule that banned people under the age of 18 from playing video games for more than three hours per week. China’s decision to restrict the hours young people are allowed to use what they call “spiritual opium” is having an impact on Swedish video game companies and the value of their shares.
“When restrictions are applied and people start talking about it, all video game companies take a hit,” said Tomas Otterbeck, stock analyst at Redeye.
According to Tomas, it is mainly “free to play” games that China criticizes. The business model for these games – which the mobile gaming industry is based on – is to make the games free to download and then get people to play them, which will eventually cause them to start buying different things that can. be used in the game.
Tomas explains that investors fear the Chinese restrictions will inspire other countries to impose their own set of restrictions.
“Investors are concerned that these restrictions will spill over across Europe like a snowball effect,” said Tomas.
This concern is not shared by all investors, however. Eric Sprinchorn – who is the manager of Tin Fonder, which invests in video game companies – does not have the same vision for the times to come for the video game industry.
“Digital entertainment will not go away. It is a structurally growing phenomenon. And the Swedish companies are outperforming, so I think the Swedish video game companies will do very well, ”says Eric Sprinchorn.