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Douyu, China's Twitch supported by Tencent, files for a $ 500M US IPO – TechCrunch

Douyu, a Chinese video streaming live streaming service, has filed with the US Securities and Exchange Commission, as it is preparing to raise up to $ 500 million on NYSE less than a year after the archive movie moved on the same stock market. Wuhan-based Douyu, whose name is translated as "fighting fish", is the second Twitch -like service supported by Tencent to become public in the United States. The direct competitor Huya, who has an equally strong name "the tiger's teeth," and even Tencent as a major investor, raised $ 1 80 million from his NYSE list in May. It's not surprising for Tencent to secure their games in esports streaming, given the giant is very dependent on video games to make money. For example, Tencent may use some of its portfolio companies' ad slots to get the word out of their new releases. In fact, Douyu's filing shows that it received a hefty 27.4 billion yuan ($ 4.09 million) in Tencent's advertising fees last year. As Douyu warns in its prospectus, its alliance with Tencent can be tough. "Tencent can devote resources or attention to the other companies that it is interested in, including our direct or indirect competitors. As a result, we cannot fully realize the benefits we expect from the strategic partnership with Tencent. The intended benefits of strategic cooperation with Tencent or potential limitations to our cooperation with other parties can materially and negatively affect our business and performance of the business. " But there…

Douyu, a Chinese video streaming live streaming service, has filed with the US Securities and Exchange Commission, as it is preparing to raise up to $ 500 million on NYSE less than a year after the archive movie moved on the same stock market.

Wuhan-based Douyu, whose name is translated as “fighting fish”, is the second Twitch -like service supported by Tencent to become public in the United States. The direct competitor Huya, who has an equally strong name “the tiger’s teeth,” and even Tencent as a major investor, raised $ 1

80 million from his NYSE list in May.

It’s not surprising for Tencent to secure their games in esports streaming, given the giant is very dependent on video games to make money. For example, Tencent may use some of its portfolio companies’ ad slots to get the word out of their new releases. In fact, Douyu’s filing shows that it received a hefty 27.4 billion yuan ($ 4.09 million) in Tencent’s advertising fees last year.

As Douyu warns in its prospectus, its alliance with Tencent can be tough.

“Tencent can devote resources or attention to the other companies that it is interested in, including our direct or indirect competitors. As a result, we cannot fully realize the benefits we expect from the strategic partnership with Tencent. The intended benefits of strategic cooperation with Tencent or potential limitations to our cooperation with other parties can materially and negatively affect our business and performance of the business. “

But there are nuances in the giant’s ties with China’s top two live streaming services such as may mean more affinity between Tencent and Douyu. Social media and gaming behemoth is currently Douyu’s largest shareholder with a share of 40.1 percent owned by the wholly owned subsidiary Nectarine. Over at Huya, Tencent is the second largest player behind YY, the pioneer of China’s live broadcast sector that had spun Huya.

As for the financial conditions, the rival pair is in a head-on race. In 2018, Douyu doubled its net revenue to $ 531.5 million. Huya held one edge, as it earned $ 678.3 million over the same period, and also doubled a year ago.

Huya may have learned a few things about making money from live streaming from the 14-year-old YY when it managed to withdraw more revenue despite owning a smaller user base. While Douyu claimed 153.5 million monthly active users in the fourth quarter, Huya had 116.6 million.

How the two earn money also differs somewhat. In the fourth quarter, 86 percent of Douyus’s revenue came from virtual things that users tipped to their favorite streams, with residual revenue from advertising and more. However, Huya relied almost exclusively on live streaming gifts, accounting for 95.3 percent of total revenue.

Screenshot of a Douyu live streaming session

As Douyu grows its coupons to spend on content as well as technologies that follow the ongoing IPO, competition in China’s live streaming landscape will warm up. Just earlier this month, Huya raised $ 327 million in a secondary offering to invest in content and R&D. Like many other companies rooted in content, Huya and Douyu depend immensely on quality creators to keep users loyal. Both have offered significant controls to live streaming hosts, promising to grow internet celebrities into larger stars.

And they have expanded the battlefield outside China as new media, most exemplified by short video services Douyin (TikTok’s China version) and Kuaishou, threatening to steal people’s eyeball time away. Both sized video programs now have a much larger user base than their direct streaming counterparts.

“We intend to further explore overseas markets to expand our user base through both organic expansion and selective investments,” Douyu noted in its IPO filing.

In a similar way, Huy’s overseas expansion is also underway. “In addition to our strong domestic growth, we have successfully utilized our unique business model to enter new overseas markets. We believe we deliver long-term value through strategic investments in overseas markets in 2019 and beyond,” says Huya CEO Rongjie Dong in the company’s Q4 performance report. .

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