DouYu and HUYA finally become abandoned children of Tencent?

Author: Huang Yu

Editor: Zhang Xiaoling

"ByteDance can finally live stream King of Glory!" On the evening of January 14th, Zhang Daxian, the former top anchor of HUYA and well-known streamer of King of Glory, made his debut in the ByteDance live streaming room, starting his first live show and exclaiming, "I've been waiting for this day for so long."

Indeed, since 2019, ByteDance has been banned from live streaming King of Glory for five years. With this live stream as the beginning, the ban on King of Glory live streaming by ByteDance officially becomes history. Netizens commented that "this is a historic moment."

Recently, King of Glory officially announced that starting from January 21st, ByteDance will have full permission to live stream King of Glory. January 14th to 17th will be the technical testing period, and January 18th to 20th will be the themed live streaming period, during which Zhang Daxian will have a continuous live stream for three days.

The opening of live streaming permission for King of Glory on ByteDance represents a milestone in breaking down the walls between Tencent and ByteDance, the two Chinese internet giants, in the gaming field.

Zhang Daxian, who used to stream on Douyu and HUYA under Tencent, and now starts streaming on ByteDance, not only witnessed the "breaking of the ice" between Tencent and ByteDance, but also experienced the decline of Douyu and HUYA.

Now, losing the advantage of live streaming Tencent games is undoubtedly another blow to Douyu and HUYA. This may mean that Tencent will no longer insist on building a dominant game live streaming platform on its own, and achieving mutual prosperity with ByteDance is the right direction.

The future path for Douyu and HUYA, as niche live streaming platforms, will become even more difficult.

Breaking Down the Walls

In order to continuously consolidate their competitive advantages and build their own business barriers, Tencent and ByteDance have had a difficult relationship in the past, engaging in comprehensive confrontations in gaming, social media, music, and other businesses. Like other Chinese internet giants, they have built high "Berlin Walls" between each other.

In the gaming field, game live streaming rights have always been the focus of competition between Tencent and ByteDance, and it has been a weapon for Tencent to block ByteDance, especially the live streaming rights of the "national-level mobile game" King of Glory.

Although it has been online for 8 years, King of Glory still demonstrates a strong vitality, repeatedly topping the global best-selling mobile game charts and being Tencent's most profitable IP.

As early as 2016, Tencent sued ByteDance for alleged infringement of the copyright of King of Glory. In January 2019, the court ruled that ByteDance should stop live streaming the game King of Glory from January 31, 2019.

Since then, ByteDance has lost the live streaming rights of King of Glory.

On the other hand, in the eyes of many game streamers, one of the important reasons why HUYA and Douyu can still maintain their position in the game live streaming field despite the fierce competition from ByteDance in recent years is that they hold the live streaming rights of King of Glory. However, under the trend of anti-monopoly and win-win cooperation, in recent years, Internet giants have gradually started to "break down walls", and the cooperation between Tencent and ByteDance has also deepened step by step.

In April last year, Tencent and ByteDance staged a "century-old reconciliation". Tencent Video and ByteDance Group announced their cooperation, and the two sides will cooperate in the promotion of long and short videos, as well as the creation of short video derivatives.

On November 26th, after more than 100 days of suspension, Zhang Daxian announced his entry into ByteDance after leaving HUYA. At that time, the market generally speculated that this was a signal for "King of Glory" to open the door to ByteDance.

Not long after, on January 13, 2024, "King of Glory" officially announced that ByteDance Live will be fully opened, and January 14 to January 17 will be set as the technical testing period.

On the first day of testing, Zhang Daxian sat in the "King of Glory" ByteDance live broadcast room, attracting a lot of popularity. It is reported that within 10 minutes of the start of the broadcast, the number of online viewers exceeded 100,000, and the number of likes reached 110 million by the end of the live broadcast.

In this way, the most profitable mobile game in China and the most important game marketing platform joined forces to fight a beautiful first broadcast battle.

Facing the sluggish growth of the gaming business, Tencent Games, which wants to consolidate its position as the industry leader, cannot ignore the value of ByteDance.

With over 600 million daily active users, ByteDance has long been one of the most important content promotion and user acquisition channels in the gaming industry. According to its disclosure, ByteDance games have covered more than 300 million users.

Some industry insiders told Wall Street News that many game developers have already figured out how to market their games on ByteDance. The success of NetEase's "Egg Party" is largely due to its promotion on ByteDance. "Tencent obviously can't stand still anymore."

What's more, after cutting off most of its gaming business, ByteDance no longer directly competes with Tencent in the gaming industry. Recently, there have been reports that Tencent is in talks to acquire game projects under ByteDance, and the relationship between the two sides is expected to become closer.

Therefore, Tencent's decision to open up game copyrights to ByteDance is a choice that respects the rules of business development.

At the same time, it also means that Tencent, who once wanted to dominate the game industry chain, has already woken up from its dream and is no longer stubbornly fighting against game live streaming.

Abandoning the Pawn

This outcome seems to be a win-win choice for both ByteDance and Tencent, but it leaves Douyu and HUYA in a state of confusion.

In order to build a closed-loop game industry chain, Tencent invested in Douyu and HUYA, becoming the largest shareholder of these two game live streaming platforms. Douyu and HUYA, which survived the fierce competition, once occupied the majority of the market share in the game live streaming field.

However, with the slowdown in the growth of the game live streaming industry, coupled with the rapid rise of platforms such as ByteDance, Kuaishou, and Bilibili, Tencent intends to coordinate HUYA, Douyu, and Penguin Esports to avoid internal consumption. Therefore, in 2020, Tencent attempted to promote the merger of HUYA and Douyu. Tencent's plan did not go as expected. The merger between HUYA and DouYu in 2021 faced an antitrust investigation and was halted, leading to a decline in both companies.

In 2022, HUYA went from profit to loss, with a net loss of CNY 487 million. Faced with worsening performance, HUYA's founder and CEO, Dong Rongjie, resigned in August last year, followed shortly after by the departure of Zhang Daxian, the "top anchor" of HUYA.

On the other hand, DouYu is also facing difficulties. On November 22, 2023, Chengdu Public Security confirmed that DouYu's founder, Chen Shaojie, was suspected of running a gambling establishment and was arrested. Under the panic, many top game anchors on DouYu suspended their live broadcasts.

In terms of user base, both DouYu and HUYA have stagnated in growth. Currently, their monthly active users are over 50 million and over 80 million, respectively, which is no longer comparable to ByteDance.

The performance in the capital market is also evident. Currently, HUYA's market value has dropped to about 10% of its peak in 2020, while DouYu's stock price has remained below $1 for several months, facing delisting.

Clearly, the strategic value of HUYA and DouYu to Tencent's gaming business has become increasingly smaller.

Game industry analyst Zhang Shule expressed to Wall Street News that the current state of HUYA and DouYu can no longer support Tencent's game promotion. Continuing to rely on copyright barriers is no longer compatible with Tencent's development strategy.

The rise of comprehensive short video platforms such as ByteDance and Kuaishou in the gaming field is undoubtedly the main reason for the decline of HUYA, DouYu, and others.

According to the "2022 China Game Live Streaming Industry White Paper" released by TalkingData, the game live streaming industry is undergoing changes. Comprehensive entertainment platforms that provide one-stop access to content resources are becoming more popular. Many users are migrating from vertical game live streaming platforms to comprehensive short video platforms, with ByteDance becoming the preferred destination for many migrating users.

In addition, game anchors are also migrating. Short video platforms represented by ByteDance have a fast-growing fan base and mature commercialization capabilities, attracting a large number of high-quality anchors to join.

Now, Tencent has opened up the live streaming rights of "King of Glory" to ByteDance. For HUYA and DouYu, this is undoubtedly another blow. In addition to losing their content advantage, more and more game anchors are likely to leave.

A top game anchor from HUYA frankly stated that if it weren't for the contract, they would have already wanted to switch to ByteDance. If they start live streaming on ByteDance in the future, there may be no need to go to other platforms because the traffic is large enough.

According to Wall Street News, many game anchors on ByteDance have already started to warm up for the upcoming live streaming of "King of Glory".

Seeing the loss of their advantage in the game live streaming field, DouYu and HUYA have long been trying to save themselves.

Last year, HUYA formulated a transformation strategy, focusing on developing game distribution, game item sales, and game advertising to change its revenue structure, which was previously mainly based on tips. Recently, DouYu internally established a Content Ecology Department and reorganized the Original Author Service Department into the Content Product Department, signaling the search for new paths. Zhang Shule believes that in the future, Douyu and HUYA can focus more on esports event live streaming and explore revenue scenarios in the esports ecosystem.

When internet giants realize that "no one can dominate everything," interconnection becomes an inevitable trend. Those niche platforms that once relied on the giants for survival have lost the advantage of exclusive resources and will inevitably face more severe market tests.

Douyu and HUYA are not the first, nor will they be the last.

In the realm of the Chinese internet, it is no longer a situation where Alibaba and Tencent dominate everything. New players like ByteDance and Pinduoduo also cannot monopolize the market. An era of open and win-win cooperation has already arrived.