As a direct cause of this, the largest videogame company in the world, Tencent, saw its share price drop by 5% in a day, which is a major hit.
"The top game companies would continue to strengthen their positions, as they have more AAA games and more resources to support the game-approval process", it added.
"Parents should minimise the use of electronic products when they are with their children", the regulators said. Then regulators stopped approving new games several months ago as a effect of a restructuring of ministry responsibilities, casting the industry in disarray.
The Ministry of Education in China, released a notice yesterday (Thursday) directing the games publishing regulator to limit the number of new online video games released and to take steps to restrict the amount of time young people spend playing games while ensuring an age-appropriate system for players.
Historically, though, the country is restrictive in what entertainment it allows the populace to consume over content concerns more than health issues.
An hour of outdoor exercise is now encouraged to supplement time otherwise spent on electronic devices.
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China is toughening its stance on video games in what it claims are attempts to combat myopia (near-sightedness) in children and teenagers.
Already, Tencent was hurting from China's restrictions on game approvals, as the China-based conglomerate had not received a new approval for a title since April of 2018, which contributed to the company's loss of more than $160 billion in market value since January of this year, according to GamesIndustry.biz. Even before the latest upheaval, state-owned media had routinely criticised Tencent and its peers for fomenting game addiction.
Only a few weeks ago, Tencent announced the launch of an worldwide competitor to Steam called WeGame, which would include many releases from the aforementioned game publishers and studios.
Mobile gaming is the dominant force, generating 61% of the revenue.
Tencent's ADRs fell 7 per cent in U.S. trading after the Education Ministry's statement, while NetEase Inc., its closest competitor, fell 7.2 per cent.
Smaller game developers also lost ground in Shenzhen.