(Yicai) Dec. 22 -- Shares in Tencent Holdings and NetEase plummeted today after Chinese authorities said they plan to limit excessive consumption in the gaming industry, which could have a big impact on the profitability of the Chinese gaming giants should the new rules come into force.

Tencent’s share price [HKG: 0700] closed down 12.4 percent at HKD274 (USD35) a share, but earlier in the day it sank as much as 15.6 percent to HKD263.60. While Netease [HKG: 9999] dived 24.6 percent to end the day at HKD122 (USD15.60) after crashing 28.2 percent to HKD116.10 earlier on. The Hang Seng Tech Index tumbled by nearly 5 percent.

Excessive spending on games should be restricted and online games will be required to set spending limits, according to a draft released by the National Press and Publication Administration today, which is open to feedback from the public.

Any in-game incentives that encourage high spending, such as rewards for daily logins as well as first-time and multiple purchases, will be banned, it added.

“Some games can sell a prop for anything from hundreds of thousands of Chinese yuan to millions of yuan, equivalent to tens of thousands of US dollars to hundreds of thousands of dollars, but they will no longer be able to do so if the measures take effect,” a gaming insider said.

Restrictions on providing paid services to minors should be strictly implemented, and the amount that children of different ages can spend on in-game services must be capped, the document said.

China’s gaming market logged a 14 percent jump in revenue this year from the year before to CNY303 billion (USD42.5 billion) and the number of gamers climbed 0.6 percent to 668 million, both new highs, according to a report recently issued at the 2023 China Game Industry Annual Conference.

Editor: Kim Taylor