文章来源丨21世纪经济报道（jjbd21）

编       辑丨刘巷，实习生思纯

Recently, the merger of Douyu and Huya once again triggered market concerns. As confirmed by a number of people close to the deal, Tencent did make a proposal to facilitate the merger of Douyu and Huya.

According to reports, the merger of Douyu and Huya will have a combined value of $10 billion. As a result of this news, the shares of Douyu and Huya have surged.

The public information shows that Tencent owns a 37% stake in Huya and 38% of Douyu. And Tencent is seeking to become the largest shareholder in the combined entity, one person said.

After Tencent became the largest shareholder of Douyu and Huya in April 2020, the rumors about the merger were discussed many times. Now that the rumors have resurfaced, it's clear that Tencent can't wait in the face of the fierce onslaught of video platforms such as Douyin, Kuaishou and Bilibili.

Tencent to drive a merger of Huya and Douyu

Tencent is driving discussions to merge China's most popular video game-streaming platforms Huya and Douyu, in a deal that would allow it to dominate the US$3.4 billion arena, according to Bloomberg.

The issue has been discussing with the duo over the past few months, although details have yet to be finalized.

The deal would create an online giant with more than 300 million users and a combined market value of US$10 billion, cementing Tencent's leading position in China's video games and social media.

"As the major shareholder of both platforms, Tencent would benefit because a merger would remove unnecessary competition between them," Bloomberg Intelligence analyst Vey-Sern Ling said.

Back in May 2020, Douyu and Huya released their 2020 Q1 financial results respectively. And for the first time, the revenue of Huya's live business declined on a year-over-year basis, accounting for 94% and advertising and other revenue accounting for only 6%; the revenue of Douyu's live business accounted for 93% and advertising and other revenue accounted for 7%.

From the financial data alone, the gap between Douyu and Huya is not very obvious. Before this, one insider in Huya one said that Douyu, Huya and eGame will be "three in one".

China's live gaming market is estimated to generate 23.6 billion yuan ($3.4 billion) in revenue this year, according to iResearch.

Douyu and Huya' shares surge

On August 5, Beijing time, Huya rose more than 11%, and Douyu was up more than 14%, Tencent in talks to merge Douyu and Huya.

According to such an increase in calculations, At this rate of increase, the two have a combined market capitalization of nearly $12 billion (80 billion yuan). As of this writing, Douyu is up 5.14%, while Huya is up 6.49%.

In April this year, Douyu filed a 20-F with the U.S. SEC, which shows that as of March 31, 2020: Tencent owns 38%; Phoenix Fuju Limited holds 5.7% of the shares; and Sequoia China holds a 9.3% stake.

Huya filed a 20-F with the U.S. SEC in April, which shows that as of April 3, 2020, Huya had 67,135,314 shares of Class A common stock and 152,357,321 shares of Class B common stock.

Tencent holds a 36.9% stake and is the majority shareholder with 50.9% of the voting rights, while Joyy Inc. owns 31.2% of the shares and 43% of the voting rights.

Tencent has invested in a host of upstream and downstream projects in the gaming industry, with Huya and Douyu holding nearly 80% of the market share, but their majority shareholder is Tencent, which owns 36.9% and 38% of both, respectively.

In addition, Tencent has invested in Bilibili, Kuaishou and other video-gaming platforms, and eGame is Tencent-owned.

According to Mob Research, China's top five video game-streaming platforms, Tencent's own operation plus investment occupy four.

Public data showed that in the first quarter of 2020, Douyu's operating revenue was 2.278 billion yuan, with the number of monthly active users at 158 million, slightly lower than last year's 159 million, and the number of mobile monthly active users reached 56.6 million, a year-on-year rise of 15.3%.

Huya's operating income for the first quarter of 2020 was 2.412 billion yuan, with 151 million monthly active users, up 22.2% year-on-year, and mobile monthly active users reached 74.7 million with a year-on-year increase of 38.6%.

Why are the two merging?

In terms of equity, Tencent has become the largest shareholder of Douyu and Huya. According to the announcement, as of April 3, Tencent held a 36.9% stake in Huya with 50.9% of the voting rights. As of March 31, Tencent held a 38% stake in Douyu with 38% of the voting rights.

In 2019, Bilibili, Kuaishou and Douyin began to participate in the video-gaming business, these "outsiders" in terms of user data is not inferior at all, have more funds to invest in tournament rights competition.

Meanwhile, due to the short video platforms competing for users, the new subscribers of Douyu and Huya showed a year-on-year downward trend, according to QuestMobile's report.

Having two head companies at the same time would have been the ideal moat for Tencent. But if they can't make a big live ecology internally and declining competitive strength externally, integration is the inevitable result.

Tencent Games in 2019 to form a separate live streaming business unit, is to reduce the internal conflicts of the three head platforms of Huya, Douyu and eGame.

From July last year, the game live streaming market differentiation became more serious. In July 2019, Kuaishou announced that the daily active users in live streaming reached 35 million, on the contrary, the DAU of Douyu was 15 million, and the DAU of Huya was 11 million. In other words, the sum of Douyu and Huya's DAU is less than Kuaishou. Right now that gap is widening.

And ByteDance is also Tencent's rival. Tencent has repeatedly sued Toutiao-based platforms such as Huoshan Video and Douyin in the past few years, protesting against their private live streaming of Tencent's game content, and the friction between the two sides has been constant.

And Bilibili is becoming the biggest variable in the video game-streaming field.

Previously, Bilibili has been known as the "game video sharing website," but recently its business to further diversify, and more prominent in the diversification of the business is the live business.

Bilibili is increasing investment in live business, recruiting related teams, spending heavily to buy games and events copyright. According to information from the live-streaming data company Xiao Hulu, the live revenue of Douyu, Huya, Bilibili and Kuaishou in March 2020 was 974 million yuan, 818 million yuan, 1.005 billion yuan and 1.749 billion yuan respectively.

In April 2020, the live revenue of Douyu, Huya, Bilibili and Kuaishou was 719 million yuan, 803 million, 892 million and 1.905 billion yuan respectively.

That is to say, if Douyu and Huya work together, it happens to be able to basically draw even with Kuaishou in the live broadcast industry, and surpass Bilibili, forming a counterbalance.

The layout of video platforms such as Kuaishou and Bilibili in terms of live game streaming has impacted Huya and Douyu. And with severe external competition and the push from Tencent, it is not surprising that Douyu and Huya to merge.