A SLEW of smaller Chinese gaming companies have announced share buybacks, plans seen as an attempt to reassure investors after the market was spooked by regulatory moves to clamp down on consumer spending on games.

Last Friday, regulators published draft rules that would ban online games from giving players rewards if they log in every day, if they spend on a game for the first time or if they spend several times on a game consecutively. All are common incentive mechanisms in online games.

That sent shares in gaming companies plunging and as of Monday evening, eight companies had unveiled plans to buy back shares worth up to 780 million yuan (US$110 million) combined, citing confidence in China’s gaming industry and the need to protect investors.

The buyback announcements come after China’s video game regulator — the National Press and Publication Administration — released a statement Saturday, saying the government would further improve the proposed rules after earnestly studying public views.

And Monday, it approved new licenses for 105 domestic online games for December, a move that some analysts said “strongly demonstrated” that authorities remain supportive of the development of online games.

The plans for buybacks served at best to stabilize share prices.

It remains to be seen how shares of Tencent Holdings, the world’s biggest gaming company and its closest rival, NetEase, will fare this week after the apparent softening in stance from the regulator.

The two Hong Kong-listed firms lost a combined US$80 billion in market value Friday. Hong Kong markets have been shut for the Christmas long weekend and will reopen today.

China’s video game revenue increased 14% this year to 303 billion yuan (US$42.7 billion), marking the highest annual sales since the data became available in 2003, according to a report released earlier this month by the Game Publishing Committee of the China Audio-Video and Digital Publishing Association.

The strong growth came on the heels of a slump in 2022, when China’s total gaming industry revenue declined 10.3% year on year. (SD-Agencies)