Top Tech: China Gaming Giants Suffer After Government Stops Approving New Releases

Chinese gaming giants are still reeling from a regulatory halt on approvals for new titles.

NetEase Inc., the country’s second-largest game developer, reported that its profit for the third quarter fell nearly 37% to 1.6 billion yuan ($232 million). Larger rival Tencent Holdings Ltd. enjoyed a 30% jump in profit to 23.3 billion yuan, but saw its gaming revenue fall 4%, led by a slowdown in its PC games business.

The industry has been mired in uncertainty since March thanks to a freeze on new-game approvals in the world’s largest video game market. There has not been any official signal about when the freeze might be lifted.

Analysts, however, said there will be consolidation in the industry at the expense of smaller players, and more quality games could be introduced to gain regulatory approval. In addition, Tencent and NetEase have other key businesses, such as social media and online music, which can make up for losses in their gaming units.

In the latest earnings statement, NetEase for the first time touted its progress in expanding into overseas markets, pointing out that they contributed more than 10% of its total online game revenue in the third quarter.

Shares of Hong Kong-listed Tencent opened 4.35% higher on Thursday, but gains had weakened to 3.75% by noon, while Nasdaq-listed NetEase closed up 2.58% in the latest trading day on Wednesday.

The following is an updated table of the earnings for Chinese technology companies between July and September.