Chinese tech giant Tencent’s revenue grew at its slowest pace in two years, results released on Wednesday showed, as it and other gaming firms now brace for an expected regulatory crackdown.

Total revenues came in at $42.3 billion for the first half of 2021, up 23 per cent year on year while operating profits were up 17 per cent. 

Sales rose 20 per cent to $21.3 billion for the second quarter, while mobile games sales grew 13 per cent. While the figures remain healthy, the growth rate has slowed closer to pre-pandemic levels.

Gaming giants saw a boom in profits over the last year as the coronavirus swept the globe and kept consumers at home. But Chinese gaming firms now face new headwinds.

China’s communist rulers have been cracking down on Big Tech and other powerful sectors deemed to be out of control with signs gaming is next in the firing line.

The negative headlines have fuelled concerns the sector is next in line for the regulatory axe

The online gaming industry, which made revenue of 130 billion yuan ($20 billion) in the first half of this year, has been the subject of several menacing state media reports in recent days, with one article labelling such games “spiritual opium”.

The negative headlines have fuelled concerns the sector is next in line for the regulatory axe, which has cut into large tech firms from e-commerce behemoth Alibaba to ride-hailing giant Didi Chuxing, hammering share prices.

Last month, regulators ordered Tencent’s music arm to relinquish exclusive licensing deals with a number of labels and quashed a potential merger of two rival game streaming platforms.

Earlier this month, Tencent dropped bombshell curbs on play time, an early sign of broader industry changes to come.

Players under 12, for example, can no longer make in-game purchases in multiplayer battle smash-hit Honor of Kings, while under-18s are locked out after two hours during holidays and one hour on school nights.

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