Huya and Douyu’s rivalry could lead to a merger as Tencent steps in

After years of competition, it appears that it is only a matter of time before China’s two major game streaming platforms, Huya and Douyu, merge.

Sources told 36Kr Tencent’s investment team reportedly met with senior executives from both Huya and Douyu to discuss the merger. The deal appears to be imminent, though no specific date or details have been confirmed.

When reached for comment, Douyu stated that it has no plans to merge with Huya and that their collaboration continues as usual. Huya has yet to respond.

Rumors of a Huya-Douyu merger have been circulating for some time.

In February, reports suggested the two companies were merging, but Douyu denied the allegations, saying their partnership was limited to collaboration. Huya did not provide a clear answer. Previously, the companies were set to merge under Tencent’s guidance, but the deal was blocked by China’s State Administration of Market Regulation, claiming it violated the country’s anti-monopoly law.

This time around, things look different. With game streaming traffic centered around the major platforms, the merger between Huya and Douyu seems more about survival than competition.

For game developers, live streaming has become both a source of income and an important channel for game promotion.

Tencent’s Huya and Douyu, along with NetEase’s CC, Bilibili and Douyin’s growing game streaming service, play important roles. While these platforms don’t generate as much direct revenue as the games themselves, their impact on game traffic and reputation is vital.

But Huya and Douyu, once industry leaders, are struggling to maintain their momentum as revenues continue to decline.

Tencent launched in January Honor of Kings Douyin’s broadcasting rights. Before this, Zhang Daxian, one of the game’s most popular broadcasters, had started broadcasting on Douyin. Previously, Zhang’s debut on Douyin was owned by Tencent Dream StarBest of Douyu in August Dungeon and Fighter Broadcaster “DNF Yige” has also moved to Douyin.

The loss of key broadcasters like Zhang Daxian and DNF Yige, as well as exclusive broadcasting rights, has weakened what was once the stronghold of Huya and Douyu.

This decline has a harsh impact on their financials: Douyu’s revenue has fallen from RMB 9.6 billion (US$1.3 billion) to RMB 7.1 billion (US$994 million) over the past three years, while Huya has recorded 11 consecutive quarters of declining revenue. Both companies’ stock prices have more than halved since their 2021 peaks. Once dominant players, Huya and Douyu have fallen far from their former peaks.

The struggles don’t end there. Both platforms have faced ongoing turbulence throughout the year. A steady decline in active and paying users has led to reports of controversial content emerging on both platforms.

Earlier this year, Douyu CEO Chen Shaojie was arrested on charges related to illegal gambling, sending shockwaves through the company. Meanwhile, Huya’s new chairman Lin Songtao announced a strategic pivot, unveiling a three-year plan focused on game distribution, virtual goods, and advertising—an acknowledgement that game streaming alone can no longer drive growth.

While the revenue potential of game streaming is limited, these platforms remain indispensable as key channels for content distribution, making them battlegrounds for major players.

In contrast to the decline of Huya and Douyu, platforms like Douyin and Kuaishou have grown rapidly, especially in the gaming space.

Tencent’s grant decision Honor of Kings The acquisition of Douyin’s broadcasting rights in January was a milestone that accelerated Douyin’s growth in the live streaming space.

Douyin publisher Li Xiaolong said: 36Kr this summer Tencent gave Honor of Kings He provided extensive support to streamers, including quick match joins, bonuses, and recruitment programs; these policies fueled his and his guild’s success.

Accordingly Late PostByteDance’s live streaming revenue in China is set to exceed RMB 130 billion ($18.2 billion) in 2022, making it the company’s second-largest source of revenue after advertising. Douyin has further consolidated its position by continuing to sign major streamers such as Feng Timo and Ke Jie since mid-2023.

Meanwhile, Kuaishou reported 9.3 billion RMB ($1.3 billion USD) in live streaming revenue in Q2, far surpassing Huya and Douyu’s combined earnings. While this includes non-gaming content, Kuaishou saw a 50% increase in signed guilds and a 60% increase in streamers compared to last year.

Live streaming sources continue to consolidate across the industry. After more than seven years in business, Tencent’s Now is set to shut down on December 26, 2023.

Given these changes, it’s not surprising that Tencent is pooling its resources.

Gaming media outlet in March Jingke Huya, Douyu, and Tencent’s WeChat Channels reportedly collaborate as a popular platform Honor of Kings the publisher’s content was released on both Huya and WeChat Channels almost simultaneously. While this collaboration has not yet been implemented on a larger scale, Tencent’s intentions are clear.

If the Huya-Douyu merger goes through, Tencent will be in a good position to strengthen its position in the game publishing industry.

KrASIA Connection contains translated and adapted content originally published by 36Kr. This article Written by Lan Jie for 36Kr.