Investors around the world see 2019 as a year of ‘careful observation and no moves’. As the stock market affected by the trade wars among the major economies, not as many companies strive to make the list until the global economy reactivated.

Douyu, a company that made a bold move to go public when still losing millions of dollars, took its chance for either a viral growth or closing down. 


The Tencent-backed streaming platform recently published its first financial report after going public. Its unexpected profits unveil the super solid foundation of Chinese netizens and their purchasing power on digital subscription. 

The Booming Video Game Industry in China

China’s growing e-sports industry – where professional gamers team up to compete against other teams as spectators watch – has seen the number of pro-players grow from 50 people in 2006, to 1,001 people in 2016 and still counting.


Almost all of EDG’s (a team of professional games) eight members are below the age of 25. According to, a site that tracks prize money, e-sports players aged between 19 and 24 tend to win the prize money, while winnings tend to drop off significantly for those over-25.


China’s e-sports growth has also been driven in part by the country’s obsession with games. About 560 million people – or seven in 10 of the country’s online population – play games in China, according to a report by market intelligence firm Newzoo.

China makes up 57 per cent of the global e-sports audience – with about 3.5 billion hours of e-sports videos viewed and 11.1 billion e-sports streams delivered to the country last year.—edited from Zen Soo, South China Morning Post

Douyu’s Controversial Burn Rate

Douyu International Holdings Limited, China’s biggest gaming-focused live streaming platform, has filed to go public in the US as it seeks to fund efforts to gain more attention from the country’s younger generation.


The Tencent-backed company on Monday filed for an initial public offering on the New York Stock Exchange, with plans to raise up to US$500 million (AU$736 million) to invest in e-sports content, R&D, and marketing, according to its prospectus

The filing comes almost a year after its closest rival Huya Inc, also backed by gaming giant Tencent, raised US$180 million in the US.

Douyu booked US$531.5 million in net revenue for 2018, up 94 per cent year on year, thanks in large part to its 6 million paying users. Its net loss widened from 2017’s US$91 million to US$127 million during the same period. Overall, Douyu has attracted nearly 160 million monthly active users across its platforms, compared with Huya’s 120 million.

While Douyu has often been dubbed “China’s Twitch”, a closer examination reveals the Wuhan-based company’s business model is actually quite different to the Amazon-owned game streaming service.

For instance, Douyu’s revenue stream is highly dependent on its users, who buy virtual gifts ranging from toy rockets to fish balls to tip their favourite streamers. In 2018, live streaming revenue kept growing to contribute 86 per cent of Douyu’s total net revenue for the year, according to its IPO prospectus.

San Fransico-based Twitch, owned by e-commerce giant Amazon, makes money through various channels including tipping, subscription and advertising. In 2017, ads generated 58 per cent of the platform’s gaming video content revenue, according to an estimate by research firm SuperData.

Tencent’s Unshakable Dominance

In 2018 Twitch set a US$1 billion target for ad revenue, Bloomberg reported last August, citing unnamed company sources. By comparison, Douyu booked a mere US$74 million in ad revenue last year.


Douyu’s reliance on virtual-gift sales means it has to keep top gamers streaming on the platform so that their fans will tip them – one of the risk factors the company noted in the IPO filing. This issue has in the past led to large paychecks for Douyu’s exclusive streamers, which in part explains the company’s US$147 million operating costs in 2018, which more than doubled from two years ago.

While Twitch has the full backing of Amazon, Douyu’s relationship with Tencent appears more nuanced. “Tencent has in the past invested in, and may in the future continue to invest in our direct or indirect competitors, including companies such as Huya,” Douyu said in the prospectus.

Tencent has put more than US$1 billion into China’s top two game streaming networks over the past year. Besides having a 40 per cent stake in Douyu, the Shenzhen-based company also holds a 35 per cent stake in Huya and retains the right to increase its stake to more than 50 per cent between March 2020 and March 2021.

Unlike Douyu, Huya is now consistently profitable – the Guangzhou-based company recorded US$14.5 million in net profit for in the fourth quarter of 2018.

A few months ago Shanghai-based Panda TV – which at one time was China’s No. 3 game streaming network – shut down its server after failing to raise fresh funds to keep operations going.

That effectively handed Tencent dominance in the country’s live game-streaming market, which is about 5 times the size of the US market in terms of active users, according to iResearch.

In addition to backing Douyu and Huya, Tencent launched its own streaming service eGame in 2016, which ranked just behind Panda TV in terms of daily active users in December 2018.—-edited from South China Morning Post

Douyu Profits After Going Public

Nasdaq-listed Douyu posted a 133% jump in revenue for the three months ended June 30 in its first financial report since going public in July. Revenue surged to 1.87 billion yuan ($272.8 million) in the quarter, based on unaudited results made available Tuesday. Douyu booked a net profit of 23.2 million yuan, compared with net loss of 228.7 million yuan a year earlier.

Douyu attributed the results mainly to an increase in live-streaming revenue, which is calculated somewhat opaquely based on the company’s total paying users and the average revenue extracted from each of them. Live-streaming revenue increased 156% during the period to 1.7 billion yuan, Douyu said.

The company’s average monthly users in the second quarter were 162.8 million, and mobile monthly active users 50.6 million, Douyu said.


Douyu CEO Chen Shaojie said the company will continue to focus on game-centric content and improving the commercial performance of other content categories. The company projected that total revenue will reach 2 billion yuan in the next quarter, according to the release.—edited from Caixin Global

Douyu might have already gain a strategic advantage ahead of Huya as the race continues. No matter who became the last-stand player, we see the Tencent would be the winner in China’s video game industry for sure. In a global scale, the subtle rivalry between Tencent and Amazon in video game seems like a much more epic struggle.

Edited by Joreal Qian