Douyu vs. Huya: The Battle To Lead China’s Esports Industry
Douyu (斗鱼) and Huya (虎牙直播) are the two most popular e-sports related live streaming platforms in China. With the rise of live-streaming apps like Yizhibo, Inke, and Huajiao, live streaming videos have become incredibly trendy in China. This is particularly true when it comes to the e-sports & video games industry. This can be seen in the West as well with the success of Twitch, which was acquired by Amazon in 2014 for 940 million dollars.
The China E-Sports Situation
Live streaming combined with video games has become one of the most popular forms of entertainment for people in China. The China esports market is the second-largest in the world behind the United States, with the two of them nearly generating over 50% of esports revenue worldwide in 2019.
Gaming is an absolutely massive industry in China. It’s estimated that by 2023 there will be over 700 million PC and mobile gamers in China. It’s due to this that Tencent, the creator of WeChat, still derives most of its income from games on both mobile and PC. Netease, another of China’s large internet companies is also heavily involved in the video game industry.
Netease and Tencent, in particular, have had a strong impact on the video game industry worldwide with both investing significant sums of money to acquire equity stakes in overseas gaming companies. Tencent has stakes in dozens of game development companies and has used its position in China to help bring these games into the market.
With such a large population of gamers, it’s no surprise that there’s stiff competition to lead in the burgeoning e-sports industry. Both Douyu and Huya have had tremendous success. Let’s take a deeper look at what they’ve done and how the platforms work below.
The Battle to Lead China’s Esports Industry: What is Douyu?
Douyu started out as the live-streaming arm of popular video-sharing website, “AcFun.” Acfun was a video-sharing site primarily focusing on ACG content, anime, comics, and games. It had a bit of turbulent history in that it constantly changed ownership with creators leaving to create rival companies.
One such spinoff was Bilibili, which focuses on the same market and was listed on the Nasdaq stock exchange with an initial valuation of USD $3 billion. Similarly, the former owner of Acfun and creator of Douyu, Chen Shaojie, left Acfun to run Douyu as its own company. Douyu, which means “fighting fish” in English, is an online live-streaming platform (mainly video games-based) designed for users to share, add, and engage with videos and creators.
Douyu was founded by Zhang Wenming and Chen Shaojie in 2014 with headquarter in Hubei in China. They claimed that they had control over 70% of China’s eSports market and 112.6 million Monthly Active Users (MAU) in November 2017. Prior to their IPO in 2019 the total MAU was recorded at 159.2 million. According to China Internet Watch the platform had achieved a market penetration rate of 4.1% as of October 208, you can see the comparison to its rivals below.
As of March 2018 data service Jiguang, reported that Douyu’s DAU had been recorded at 6.7 million, while its rivals, YY and Huya, had only achieved 5.8 million and 4.74 million respectively. Douyu was the largest game-streaming platform by average total monthly active users (MAUs) on both mobile and PC during the fourth quarter of 2018 according to recent details released in its IPO prospectus.
In March 2018, Tencent, one of China’s tech titans and creator of WeChat, invested RMB $4 billion in Douyu. This was the latest in a series of acquisitions and investments made by Tencent to strengthen its hold on the digital and social media ecosystem in China. Tencent is certainly looking to control the China e-sports market as it also invested in Huya, which we’ll cover below.
Douyu has spent the majority of its funds on talent acquisition spending huge amounts so sign exclusive contracts with the top streamers in China, with most coming from YY and Huya. Douyu now has 51 of the top 100 video game streamers with 8 being in the top 10! With many of these streamers demanding massive salaries, it’s easy to see why Douyu would need to raise funds in an IPO to grow its war chest.
Since then it’s been rumored that Douyu would seek to IPO in either Hong Kong or the United States. In July 2018 many news outlets reported that the company seemed to prefer listing in the United States and would attempt to raise 700 million in its IPO. Douyu’s IPO is estimated to raise from USD$600 million to USD$700 million.
However, considering the regulatory environment in China, Douyu’s IPO could be postponed. The Chinese government requires game publishers to apply for licenses before publishing games, due to fears of violence in video games and video game addiction among children. A recent slowdown in license approval has had a drastic effect on the video game industry as a whole, resulting in drastically slower growth than any year in the last decade. Below are some updates on the status of Douyu’s IPO
Update 02/07/2019: Douyu filed its recorded earnings of a 123.4% increase in profits and net profit of RMB 18 million with the US Security and Exchange Commission (SEC) in the first quarter of 2019
Update 08/07/2019: According to the Chinese financial blog, IPO Zaozhidao, Douyu with its strong performance that is predicted to go public on the New York Stock Exchange on July 17th
Final Update 18/07/2019: Douyu sold USD $775 million dollars in stock at a $3.73 billion dollar valuation making it the largest Chinese IPO of 2019 as of 16/07/2019, surpassing that of Luckin Coffee which raised $645 million. Shares began trading on Wednesday 17/07/2019 on the Nasdaq stock exchange under the ticker symbol “DOYU.” For more information check out this article from CNBC.
The Battle to Lead China’s Esports Industry: What is Huya?
Huya is a video-game focused live-streaming platform. The company is a subsidiary of YY Live, another live-streaming platform that listed on the Nasdaq stock market in 2012. The company was founded by Li Xueling in 2011 with its headquarter in Guangzhou, China. They were the first video game focused live-streaming website in China to attain mass popularity. Huya, which means “Tiger’s Teeth,” in English was established in 2014 and has been a strong player in the market since.
The market penetration rate for Huya was recorded at slightly lower than Douyu, with 3.5% as of September 2018.
Huya reportedly had 99 million MAU and 4.2 million paying users as of Q3 2018 as stated in their unaudited financial statements. They are listed on NYSE in 2018 the company listed on the NYSE with an IPO price of $12 per share. Huya received investment from Tencent on the same day it also invested in Douyu. Huya received RMB $438 million as compared to Douyu’s RMB $4 billion.
Huya broke the 100 million MAU milestone in Q4 2018, solidifying its position as one of China’s most popular live-streaming platforms. Twitch, the platform many call the inspiration for both Douyu and Huya, has an estimated 140 million monthly active users globally.
One other thing to note about Huya is that they they also have a global brand which has become popular in Southeast Asia called Nimo TV. Nimo TV has so far launched in Malaysia, Vietnam, Thailand, Indonesia, and the Phillipines as of October 2018. It has already become popular with local video game players and KOLs, and represents an important part of Tencent and Huya’s strategies for international expansion.
Douyu and Huya’s User Base & Target Audience
As you would expect, since these platforms focus on video games and e-sports, the audience would be made up primarily of young men. You would not be wrong if you were following this line of thinking.
According to a report released by Tencent in 2018 on the China e-sports industry as a whole, the China e-sports industry is expected to reach 350 million users in by 2020 and generate USD $1.5 billion in revenues. While the audience is predominantly male, there were some interesting figures regarding the remainder of the audience in the report.
“The surveys found that the China eSports market isn’t comprised of only the younger male generation. Instead, over 20% of China eSports viewers/users are females and parents; 24.3% are females and, of this group, 69% are between the ages of 21; and 30. 29% of eSports users are parents, 59% of which are between 31 and 40 years old.” as stated by Eric Gibbs in his analysis of the Tencent’s 2018 report on the E-Sports industry.
Of those interested in Esports, 72% of the esports users have watched esports content before and 36.6% of the users reported that they had only started in the past two years.
Live Streaming Content Categories on Douyu and Huya
For Douyu, apart from covering video game streams and broadcasting international e-sports competitions, their live-streaming videos also include traditional sports events, variety shows, food, and technology.
As for Huya, its content is a bit more diversified. For gaming, Huya has approximately 300 featured channels in 4 categories including different kinds of games. Other than this, they also include a variety of other entertainment such as music, sports, beauty, mukbang (people eating lots of food while talking to the camera) etc.
Many E-Commerce shops have begun hosting live-streaming sessions on the platform to showcase their products, showing how diversified Huya has truly become.
To give you an example of how strange some of the content can be there was even a phenomenon where DiDi (China’s largest ride hailing app) drivers were live-streaming their passengers without their consent. This was ultimately banned after users expressed outrage at the invasion of privacy.
Many celebrities have hosted live-streams on the platform as well, such as Lin Chiling, Zhao Liying, Tang Yan and even Yoona from the famous Kpop band, Girls’ Generation.
Video Games On the Platforms
The games are precisely classified into a few categories on both platforms, such as PC video games, mobile games, etc.
It is no surprise to see that the most popular games on both platforms are almost the same. According to the charts, popular games like League of Legends (LOL), CS:GO, CrossFire, PlayerUnknown’s Battlegrounds (PUBG), Wangzhe Rongyao (Honor of Kings ) and DOTA are dominating on the video games live-streaming platforms like Douyu and Huya.
Every day, there are different kinds of esports competitions being broadcasted on the platforms such as The League of Legends Pro League by Tencent (LPL) and The Electronic Sports League (ESL). You can also see a the competition schedule for the next four days as well.
Altogether Douyu has exclusive streaming rights to 29 major tournaments in China, including League of Legends, PlayerUnknown’s Battlegrounds, and DOTA2 according to information listed in its prospectus submitted for its IPO filing.
Advertising on Douyu and Huya
As you can tell, the hosts of the live-streaming sessions are one of the key elements on the platforms. Any registered user can become a host in their live-streaming videos after undergoing a verification process. If you accumulate a certain amount of popularity, the platforms may even sign a contract with you and you’ll begin receiving a monthly salary. This income comes primarily from advertising fees paid by third party companies. Douyu and Huya both also allow users to tip their favorite hosts for creating good content.
On both these live-streaming websites, there is a channel where companies sell/promote theirs products or services. This is especially convenient for businesses working with hosts who can direct users directly to where they can purchase the products they are promoting.
On Douyu, the hosts can set their own advertisement preferences for their channel, which means it’s better for the companies who want to advertise during their broadcast to build a relationship with the hosts first.
As of January 2019, the most popular host on Douyu is called “旭旭宝宝” who has 820,000 fans and has accumulated over 33 million likes from other users, the total value of gifts (including cash) received from his fans has reached over RMB$20 million, which is incredibly impressive!
On Huya, companies can appoint a certain host and pay them to sell their products in different ways, such as with floating QR codes, product placement etc.
As of January 2019, the most popular host on Huya is called “集梦阿布” with over 480,000 fans and the highest total value of the gift he received from his fans in one single stream was over RMB $1 million. For some reason his channel was down at the time of writing this, we’ll see if it comes back up soon.
This kind of advertising allows for an immediate interaction between customers and brands while at the same time allowing for deeper communication & guidance through the promotion from the host. Compared to normal advertisements, such as television commercials, advertising through live-streaming videos can have greater engagement and help foster a stronger brand image.
The China Esports Market: Douyu and Huya’s Plans for the Future
Investment From Tencent to Drive Greater Cooperation, Less Competition
Douyu and Huya were competing heavily throughout 2017 for popular hosts. However, as mentioned, Tencent invested in both Douyu and Huya on the same day in March 2018. In other words, instead of competitors, they’ve been forced to become “brothers” by their benefactor.
Tencent is now indirectly dominating the China esports streaming sector by monopolizing a big part of the game market in China and leaves little room for entrants. Yet, this alignment may help foster a win-win situation by allowing the platforms to focus on their own development rather than coming up with strategies to hurt each other. It also helps to encourage the two leading platforms to attract a larger audience and drive for more growth in the video games live-streaming industry as a whole.
It obviously makes sense for Tencent to invest in these companies as given that a large portion of Tencent’s revenue comes from video games. Both these channels act as strategic partners for Tencent to help with distribution and promotion of Tencent’s newly released video games.
Douyu and Huya’s Plans for the Future: Investing more on hosts
Hosts are the biggest source of wealth for both of these platforms, as they are the main draw for average users on the platform.
The founder of Douyu, Zhen Shaojie, said that Douyu will be investing more and putting more resources to nurture their hosts. He also added that they would provide more economic incentives and different skills training courses for the potential hosts while at the same time helping them increase their exposure.
For Huya, they’ve begun holding a “Star Night” every year (some says this is Chinese video game-streaming’s Oscars) where they award the top ten influential hosts of the year. This can encourage more interactions between hosts and their fans.
Huya has also announced that they will set up a subsidiary in 2019 dedicated fully to focusing on the e-sports industry. This will once again put them in direct competition with Douyu. So far Huya hasn’t delved too deep into E-sports. So far it’s only foray has been it’s creation of an e-sports team on the popular game from Blizzard-Activision, Overwatch, called the Chengdu Hunters.
The Boom in Live-Streaming for E-Sports & Video Games Will Continue to Grow
Live-streaming provides a way to broadcast live events for the audience and this makes it important to esports. One of the reasons why Douyu and Huya have achieved success is because they’ve captured this opportunity and are able to offer people a unique form of entertainment. It’s clear that China is taking E-sports seriously, just check out E-Sports Town, which was recently opened in Hangzhou China below.
As you know, these trends are constantly changing and there will likely only be one winner in this battle to capture the Chinese E-Sports industry. If you’re in the video game industry these are two platforms you need to know about and should consider utilizing if you want to promote you products in China.
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