Industry executives have said many games in China, and not just those belonging to Tencent, have since March faced a hiatus in license approvals after China revamped its content regulatory body and divided its powerful State Administration of Press, Publication, Radio, Film and Television earlier this year.
Tencent Holdings Ltd. joined the ranks of Facebook Inc.by reporting shockingly poor quarterly numbers, underscoring how tech superstars that led the market to new heights are showing signs of strain.
The Chinese tech conglomerate said that its net income for the three months that ended in June was 17.9 billion yuan ($2.6 billion), a decline of 2% compared to the same period past year. Second quarter mobile earnings are forecasted to also drop by 6%.
- 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.
Despite the current suspension of game approvals, Lau said Tencent believes the situation is "not a matter of whether [new games] will be approved for monetisation, but a matter of when exactly".
The outlook for Tencent, which has lost some $170 billion in market value since peaking in late January amid volatile trading, is overshadowed by tightening internet regulations in a country where the government can make or break a business.
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 gaming operation's troubles were brewing well before China decided this week to shut down Monster Hunter: World from Tencent's PC downloads service just days after the action title debuted.
Under pressure to curb gaming marathons on Tencent's smash hit "King of Glory" mobile multiplayer battle game, the company previous year started restricting daily playing times for children.
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. Daily transaction volume was up 40 per cent in the quarter. For all its heft, though, gaming remains essential for Tencent's bottom line. Revenues rose 30% to 73.7 billion yuan ($11.1 billion), but fell short of the 77.3 billion yuan projected by analysts, according to Thomson Reuters.
He said the block follows concern over Tencent's ability to monetise popular game PlayerUnknown Battleground (PUBG), which it was forced to alter previous year after the regulator branded it too gory and violent.