Tencent is leading negotiations to merge China’s biggest gaming streaming platforms Huya and Douyu into a single entity valued at $10 billion and controlled by Tencent.
The merger would see Tencent become the controlling owner of a gaming streaming behemoth with more than 300 million users—the largest in the country.
The Chinese video games and social media titan – which owns a 37% stake in Huya and 38% of DouYu – has been discussing such a merger with the duo over the past few months, although details have yet to be finalized, said the people, who asked not to be identified because discussions are private.
Faced with rising competition for advertisers from ByteDance and its rapidly growing stable of apps, the WeChat operator would be able to sell ads across an expanded content network. Huya and DouYu would keep their respective platforms and branding while working more closely with Tencent’s own e-sports site eGame, said the people.
China’s video game-streaming market is estimated to generate 23.6 billion yuan (US$3.4 billion) in revenue this year, according to iResearch. The country’s streaming networks live and die by the popularity of star players as well as the virtual tips and gifts that fans buy for them, leading to intense bidding wars for the most-recognised names.
Companies like Google-backed Chushou TV closed their services after failing to secure new money, while NetEase’s CC Live has found a small niche in broadcasting its in-house titles.
Already featuring Tencent’s marquee video games like PUBG Mobile and Honour of Kings, Huya and DouYu have established a clear lead as the top two platforms. Nevertheless, revenue growth slowed down for both in recent quarters as users shifted their attention to ByteDance’s Douyin, the Chinese twin to the globally popular TikTok short-video service.
A merger would help Huya and DouYu lower broadcast and content costs at a time when rival video services like Kuaishou and Bilibili, both also backed by Tencent, intensify their efforts to compete for more gaming content.
In April, Tencent bought an additional stake in Huya for about US$260 million from Joyy, boosting its voting power in the platform to more than 50%. When asked about the possibility of a merger with Huya, DouYu founder, and chief executive Chen Shaojie told analysts on a March earnings call, “we believe it’s Tencent’s vision”.