Technology Stocks

American Games Makers Electronic Arts Inc (NASDAQ:EA) Hit Hard With Chinese Regulators Applying Brakes

The stock of Electronic Arts Inc (NASDAQ:EA) closed at $95.78 (down 2.11%) when it hit hard by the Chinese regulators with a ban on new game approvals. It retreated from a high of $106.84 recorded on February 15 to trade now at $98.5. The company has a market cap of $29.31 billion. The shares of another game producer Take-Two Interactive Software Inc (NASDAQ:TTWO) also took a beating on Chinese ban on new approvals. Its shares dropped to $88.66 (down 5%) and closed at $87.26.

The shares of Electronic Arts staged a smart comeback after garnering 10 million registered users for a free-to-play game. The company gained on launching the game Apex Legends three days before the Q3 earnings release. However, it received a week response for the game Anthem.

Plans Launch of Apex Legends

Electronic Arts planned for the launch of Apex Legends in alliance with Tencent Holdings, a video game giant in China. It is one of the popular games. Senior Vice President (Content) of Twitch, Michael Aragon said Apex Legends attracted 25 million viewers during the first week of launch on Twitch.

Take-Two, which produced popular games like ‘Red Dead Redemption Two,’ and ‘Grand Theft Auto,’ aims big on the Chinese market. Strauss Zelnick, Chief Executive Officer of Take-Two, said China is a promising market for video games. The new ban temporarily impacts the ambitions of the game makers in China. The Chinese government also introduced a similar nine months ban in 2018.

Approval for 3,000 games

General Administration of Press and Publications (GAPP) approved 1982 new games in 2018. According to Reuters, GAPP would approve new games of around 3,000 in 2019. It is a significant drop from 9,651 games approved in 2017. While addressing the challenges faced by the company in markets like China on a February 6, 2019, conference, Zelnick said the company could enjoy great benefits when regulation soften.

Electronic Arts in a race for Nexon

Electronic Arts, Amazon, and Comcast Corp, are in a race for Nexon, the biggest gaming company in South Korea. MBK Partners, a private equity fund, Kakao, and Netamarble, the tech firms in South Korea, submitted a bid for NXC Corp, a holding firm.

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