Chinese gaming and social media giant Tencent announced its slowest quarterly profit growth in two years on Wednesday, affected by the blow to gaming, and said the outlook for the advertising industry will continue to be weak until next year.

The company said in a statement that its net profit for the three months ended September increased by 3% to RMB 39.5 billion (approximately Rs 45,962 crore). According to RefinitivR7;s data, this exceeded the expectations of analysts who predicted a decline.

According to Refinitiv data, revenue increased by 3% to 142.4 billion yuan (approximately Rs 1,57.15 billion), slightly lower than expected and the company’s slowest quarterly growth since its listing in 2004.

The company with the largest market value in China has been hit by new restrictions on the amount of time minors can play video games. Since August, the government has not approved any new games.

Beijing has carried out a year-long crackdown on the once free-willed Internet industry, punishing well-known companies that had previously been regarded as regular market behaviors, and evaporating billions of dollars in market value.

Tencent Chairman and CEO Ma Huateng said in a statement: “In the third quarter, the Internet industry, including the domestic game industry and certain advertiser categories, adapted to the new regulation and macroeconomic development.”

He said: “We are actively embracing the new regulatory environment, which we believe should help the industry embark on a more sustainable development path.”

The owners of games such as King of and PlayerUnknown’s said in a statement that sales of mobile games have increased by 9%.

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Tencent said that in September this year, minors accounted for 0.7% of domestic gaming time, down from 6.4% in September 2020, after the new government restrictions came into effect at the beginning of the month.

Regulatory crackdowns have also hit the counseling center and the medical aesthetics industry, and inhibited their interest in advertising.

Tencent stated that its advertising revenue growth rate has slowed during this period due to regulatory factors and macro challenges. It expects the entire industryR7;s advertising pricing to remain weak for several quarters, but said the industry should adjust next year.

TencentR7;s market value has shrunk by nearly 18% this year, while the broader market has fallen by 9%.

© Thomson Reuters 202