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China Woes Hit Japanese Games Developers

The shares of Japan’s leading video games firms dropped Wednesday in what was seen as a reaction to the woes of the games sector in China.

Shares of Nexon dropped 5.86% to JPY1,318 at the close of business on the Tokyo Stock Exchange. Capcom was down 2.7% at JPY2,558. Konami tumbled 4.17% to JPY4,710, and Nintendo fell 2.95% to JPY34,850. They compare with an overall slip of just 0.68% for Japan’s Nikkei 225 index.

The slumps followed the halt in sales Monday of Capcom fantasy “Monster Hunter: World” by Tencent subsidiary WeGame, on the orders of Chinese regulators. Tencent said it would reimburse the roughly 1 million players who had paid $43 apiece for the game.

China’s games industry regulator said it had received several complaints about “Monster Hunter: World,” which is rated for players ages 13 and up in the U.S. Other sources say the move reflects infighting within China’s media and entertainment regulatory system, which has led to a backlog of games and feature films that await approval and that are unable to commit to marketing campaigns for lack of a launch date.

Some media reports say the bottleneck means that digital giant Tencent does not yet have permission for desktop versions of “PlayerUnknown’s Battlegrounds” and “Fortnite,” two of the world’s hottest games at the moment. Tencent also does not have permission to monetize the mobile version of “PUBG,” for which it has 170 million installations.

Tencent’s shares were down 3.44% on Wednesday, following a more than 3% fall on Tuesday. They stood at HK$336.6 at 3:45 p.m. local time in Hong Kong.

Tencent’s second-quarter results, due to be published after trading closes Wednesday, will be closely scrutinized for any regulatory impact on the company’s finances and any commentary on its future direction. Tencent is China’s largest games distributor, and by revenue is also the biggest in the world.

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