Shares of Chinese technology giant Tencent Holdings plunged on Thursday after it reported its first quarterly profit fall in almost 13 years and said it did not know whether it would get Chinese approval for its most popular game.
Tencent has been shifting its business away from the gaming industry. Tencent shares also slid by 3.9% to an all-time low this year.
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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 a year ago.
Revenue rose 30 percent to 73.68 billion yuan in the latest quarter, lagging 16 analysts' average estimate of 77.5 billion yuan.
Chinese gaming and social media company Tencent has shed more than Dollars 160 billion in market value since its January peak, while smaller players claim they are struggling to survive without new titles.
This is not the first time Tencent's games have come under scrutiny from regulators.
Actual sales revenue in the Chinese game market was CNY105 billion, an annual rise of 5 percent, shows a report on China's first-half gaming sector that the Work Committee for Game Publishing under the China Audio-Video and Digital Publishing Association released.
Authorities in Beijing have reportedly halted approval of game licenses, stoking fears that the government will crack down on video games that have driven Tencent's revenue growth.
"The gaming fundamental is actually as strong as it has been", Lau said, pointing to growing user numbers and downloads for the company's games.
Company chairman and chief executive Pony Ma Huateng, who let Lau respond to analysts' questions about the gaming business, said mobile games revenue was affected by external factors, but there was still "healthy growth in the number of people playing our mobile games each day in China and overseas".
Its shares have declined 12 percent so far this week and have lost a third of their value since hitting a record high in January as investors fret about growth momentum.
"For new game approvals, there will continue to be a drag", said Ms Alicia Yap, Citigroup Global Markets's head of pan-Asia Internet research.
The pace of the company's investment is also slowing.
"In China, DAU for our smartphone games grew at a double-digit rate year-on-year, but monetization per user declined as users shifted time to non-monetized tactical tournament games", Tencent said in a filing.
Unsurprisingly, mobile games continue to be the driving force of revenue for the entertainment company, with 17.6 billion yuan (~$2.53 billion) generated over the quarter, totaling about 25 percent of total revenues.