Just last week, Monster Hunter: World was released. The game promises the ultimate hunting experience for PC users and gamers in China. Despite the game’s recent release, regulators are now ordering Tencent Holdings Ltd., the social media company responsible for releasing the game for download, to take it down and cease allowing for downloads.
Monster Hunter: World was created in collaboration with Capcom Co. Within the first few days of the game’s release, authorities received many complaints amount the content and gameplay. Due to the large number of complaints, the government quickly decided to revoke the operating license of Tencent. As a result, share prices for both Capcom and Tencent saw a decrease on Monday, with Capcom taking the largest hit with a 10% drop.
In recent months, Tencent has faced many difficulties with establishing and maintaining its gaming operations. Besides this most recent problem with Monster Hunter, Tencent has also run into issues with their main mobile game. The game, known as PlayerUnknown’s Battlegrounds, has not received the approval to be released in a desktop version to China. In a quote about the company, Brock Silvers, a Managing Director of Kaiyuan Capital, said: “The recent fumbling of core gaming operations is a worrying trend, and investors can reasonably begin to ask if constant investment and competition with Alibaba are causing Tencent to lose focus.”
In addition to the Tencent stock drop, which occurred on Monday, the company has seen a 15 percent slide in its stock price since June. In large part, these gaming operations issues have led to an inability to increase revenue growth and as such, are decaying the stock price. In the past, the company has experienced problems like any company, but the multiples obstacles at once have really pushed the company down the wrong path. In large part, Brock Silvers believes that the expansion in the scope of the company has led to these failures. In his words, “Tencent used to be world-class gaming and social media company, but has transformed into a massive multi-sector VC operation with important gaming and social media sidelines.”
While the new game Monster Hunger: World has faced this new resistance in China, it has experienced large success in Japan and other parts of the globe. The game sold more than 8 million copies worldwide and has been popular in Japan. However, with the new title, Capcom re-designed many features of the game, which in part have led to the complaints. In the new title, many elements were designed specifically to cater more to the Western audiences, allowing for more freeform online play and less forced direction.
At this point, only time will tell how Tencent will overcome these obstacles and if they are able to overcome them at all. Certainly, continued inability to publish and download the games will continue to affect the stock negatively and greatly reduce the growth potential of the company.