Tencent announced its first ever quarterly revenue decline on a yearly basis, following stringent regulations from the Chinese government on gaming as well as a resurgence of Covid-19 that weighed on the Chinese tech giant.
In the second quarter, Tencent posted revenue of 134.03 billion yuan, a slight miss of 134.6 billion yuan expected and also a decline by 3% year-on-year from the revenue of 138.25 billion yuan.
However, net profit largely missed expectation in this quarter, reporting at 18.62 billion yuan, compared to 25.28 billion yuan expected and 42.53 billion yuan in 2Q21.
Tencent is one of the tech giants impacted from the Chinese government regulatory tightening on the domestic technology sector, cutting time for children on playing video games, and continues to pressure the company.
Last year, China regulators placed a new policy to limit gaming hours of children aged under 18 to one hour from 8:00 p.m. to 9:00 p.m. on Friday, Saturday, and Sunday; and on public holidays, decreased from around 1.5 hours on most days.
The stringent regulations will enforce gaming companies to restrict online gameplay outside those hours. Also, the gaming providers must have a real name verification system to ensure the new rules are enforced. This restriction does not only apply to PC gaming, but to all platforms, including mobile phones as well.