Swedish video game companies affected by the Chinese gaming ban

Some investors are woried that the Chinese video game restriction will inspire European countries to make similar restrictions

In August China officially implemented a rule disallowing people under the age of 18 to play more than three hours of video games a week. The Chinese decision of restricting the hours that the youth are allowed to use what they call “spiritual opium” is having an impact on Swedish video game companies and their stock value.

“When restrictions are enforced and people start talking about it, all the video game companies take a hit,” stock analyst at Redeye, Tomas Otterbeck, says.

According to Tomas, it is especially the “free to play” games that China has been criticizing. The business model of these games – that the mobile game industry is based upon – is to make the games free to download and then get people hooked on playing them which will eventually lead them to start buying different things that can be utilized in the game.

Tomas explains that there is a fear among investors that the Chinese restrictions will inspire other countries to make their own set of restrictions.

“There is a worry among investors, that these restrictions will spread all over Europe like a snowball effect,” Tomas says.

This worry is not shared by all investors, however. Eric Sprinchorn – who is the manager at the Tin Fonder company which invests in video game companies – does not have the same outlook on the times to come for the video game industry.

“Digital entertainment will not away. It is a structurally growing phenomenon. And Swedish companies are overperforming so I think the Swedish video game companies will do just fine,” Eric Sprinchorn says.

About Lasse Sandholdt

ScandAsia Journalist • Scandinavian Publishing Co., Ltd. • Bangkok, Thailand

View all posts by Lasse Sandholdt

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