Yahoo Finance Tencent, Nexon Soar After Surprise Approval for Marquee Game
(Bloomberg) -- Tencent Holdings Ltd. and Nexon Co. surged after Chinese regulators approved their Mobile DnF game, green-lighting a long-anticipated marquee title that had failed to pass regulatory muster for years.
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Investors welcomed the approval at a time the world’s largest mobile gaming arena is grappling with a downturn and regulatory uncertainty. Tencent, which developed the title jointly with its Korean partner, gained as much as 5.9% Friday in Hong Kong, its most since July. Nexon traded limit-up in Tokyo, set for a record daily of more than 20%.
The title’s approval is a big boost for Tencent’s 2024 pipeline, which still relies in part on years-old titles and is hungry for new blockbusters. The Chinese company had counted on the title to bolster its pipeline as far back as 2020, but the game failed to emerge at the height of a Beijing regulatory crackdown. Nexon said at the time it was delaying the title to comply with restrictions aimed at curbing addiction and play time among Chinese minors.
DnF, or Dungeon & Fighter, contributes an estimated quarter of Nexon’s sales, and its launch in China will likely help power up the franchise, Bloomberg Intelligence said.
“We view this as a positive surprise as this title is highly anticipated by the market,” Jefferies analyst Thomas Chong wrote.
What Bloomberg Intelligence Says
The approval of Nexon’s Dungeon & Fighter (DNF) Mobile game for launch in China, the world’s largest mobile gaming market, is set to catalyze sales. The title achieved 60 million preregistrations before its planned August 2020 launch in China, which was delayed indefinitely for regulatory reasons, vs. 2 million downloads achieved by the mobile game in South Korea since launch. DNF, Nexon’s top-selling franchise, has stayed popular among Chinese PC gamers since its 2008 launch.
- Nathan Naidu, analyst
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More broadly, the approvals — which included several Nintendo Co. Switch titles — suggest business as usual in the Chinese gaming arena, at a time concerns linger about regulatory intentions.
In December, the industry watchdog spooked investors by proposing a plethora of regulations that appeared to signal its intention to sharply enhance oversight, in particular a cap on in-game spending that it never specified nor clarified.
The watchdog has since signaled its intention to hear the industry out and possibly roll back some of the harsher edicts, though officials have made no promises. The feedback period for the draft rules ended Jan. 22 and a final version is expected soon.
Read More: Tencent Recoups Some Losses After China Soothes Crackdown Fears
(Updates with a chart and regulation context in the second paragraph. A previous story was corrected to specify the latest rules emerged in December.)
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