Anonymous sources supposedly familiar with the matter told Bloomberg that a shake-up within the Chinese government has caused a lack of clear leadership in the National Television and Radio Administration and the ministry of Culture and Tourism.
The company said its net profit fell 2% to 17.9 billion yuan ($2.7 billion), well shy of the consensus analyst estimates of 19.6 billion yuan for the quarter ended June 30.
Tencent's smartphone game business reported a decline of 19 per cent to 17.6 billion yuan from the prior quarter, as it failed to get approval to charge fees for popular tactical tournament games and new game releases were delayed.
League numbers are down from their peak, but it's still one of the most-played games in the world and we're very happy with the numbers, and we think some of the new content we're putting out soon can only help with player numbers. The company's German-traded shares plunged as much as 10 per cent. In addition to the delay in new approvals, this week Tencent was ordered by the government to pull Monster Hunter: World just days after its debut, which the company said was a one-time issue.
- Shares in Naspers, the South African group that is Tencent's largest shareholder, were down 7.5% at R308 319 by 11:00 GMT on August 15.
Chinese technology giant Tencent led the losses, shedding almost 4 percent and extending a 3.4 percent drop a day earlier, after Chinese regulators blocked the sale of one of its blockbuster titles, "Monster Hunter: World".
While there is a "green" process that enables the company to test monetization of games, that won't apply to PUBG because of its sheer scale, Lau said.
Meanwhile, the freeze has sent shockwaves throughout the industry, as Tencent distribute games in China for some of the world's biggest publishers, including Activision Blizzard and EA.
The owner of messaging platform WeChat, which has more than 1 billion users, has struggled to secure approval from Chinese regulators to monetize some of its most popular online games. "The deeper implication is that games will be slowing down and they need to find new areas of growth". For all its heft, though, gaming remains essential for Tencent's bottom line. Tencent is still waiting for license approval for the desktop versions of PlayerUnknown's Battlegrounds and Fortnite, along with the mobile version of PUBG.