Tencent and NetEase Adjust to China’s Tightened Gambling Rules

China’s steadfast stand against gambling isn’t new. Its commitment to keeping gambling activities at bay has led authorities to maintain a sharp vigilance on any activities that might hint towards illicit gambling.

In a ripple effect of this clampdown, online platforms such as Tencent Music and NetEase’s Cloud Music have made significant changes. They’ve cut back on certain live-streaming features, which, as reported by Reuters, affected their revenue this quarter. Some analysts hinted at these features potentially being exploited for unlawful gambling, but the companies have cited other motives for the shift.

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Tencent, explaining its recent decision, emphasized a focus shift towards being “music-centric.” However, a recent report revealing Tencent Music’s financial performance was telling. There was a 24% drop in the social entertainment revenues year-over-year for the second quarter of 2023, a category where live streaming plays a crucial role.

Huya, Tencent’s gaming broadcast platform with similarities to Twitch, reported a similar trajectory. The social entertainment revenues for Q2 2023 receded by 16% from the previous year. Huya has stated its intention to enhance user experiences and foster a “healthier” environment as the rationale behind the live streaming modifications.

Meanwhile, NetEase’s Cloud Music also made adjustments to their live streaming aspects. Citing the reason as bolstering its “internal controls mechanism” and enhancing “stricter monitoring over irregular user activities,” Cloud Music, like Tencent Music, experienced a dip of 24% in its Q2 social entertainment revenues compared to 2022.

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