Tencent folds game live-streaming investees Huya and Douyu under one roof to avoid sibling rivalry

Tencent tries to curb the expansion of rivals like ByteDance and Kuaishou.

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Chinese social networking and gaming powerhouse Tencent has stealthily folded its three game live streaming businesses, including its investees Douyu and Huya, as well as self-owned eGame, into a new unit in March in a bid to achieve more synergy, avoid sibling rivalry, as well as to respond to increasing competition, according to local media LatePost.

The newly-minted unit falls under Tencent’s Interactive Entertainment Group (IEG), whose main business mostly involves online gaming and e-sports. IEG is one of the most profitable groups out of Tencent’s current six business groups after its most recent restructure.

The consolidating move is expected to help Tencent tighten its grip on the Middle Kingdom’s game live streaming market by better coordinating resources scattered among the three and cutting off money-shedding competition, industry insiders cited by local media said. There were also rumored internal talks exploring a stillborn plan of merging Huya and Douyu outright, per the same LatePost story.

Douyu and Huya, the two biggest players in China’s e-sports live streaming sector, are both backed by Tencent. The Shenzhen-based gaming giant is Douyu’s largest shareholder with a 40% stake. It is also Huya’s second-largest shareholder, owning 34.5% of the company.

Douyu is the largest game live streaming service in the country by monthly active users (MAUs), which reached 162.8 million in the second quarter of this year, according to the company’s latest quarterly results, but it lags behind Huya both on margin and revenuesAbacusnews reported.

Even though both backed by Tencent, Douyu and Huya have long locked horns with each other in a race to dominate the Chinese game live streaming market, an estimated RMB 24.6 billion (USD 3.5 billion ) market by 2020, according to Beijing-based internet market intelligencer iResearch.

Source: iResearch

The battle between the two is money-consuming. Both platforms have been shelling out millions of dollars to retain top game streamers exclusively, who are their main sources of revenue. Putting the two companies under the same roof is supposed to help stop the money-bleeding as a result of their sibling competition.

Tencent’s move to consolidate its game live streaming platforms could also be a response to the then entrance into an already competitive market pronounced by some other local tech mammoths, including ByteDance.

Also in March, ByteDance, owner of the rival short-video app Douyin (known as Tik Tok outside China) and Huoshan, made quite some noise about beefing up its live streaming business. Beijing-based ByteDance, which is the world’s most valuable startup, said it will cooperate with more than 1,000 local game guilds.

Chinese game guilds involved in live streaming are like the talents agency in the entertainment world, they recruit, train and help promote online game live streamers on various platforms, including Douyu and Huya, and take a cut from the streamers’ revenue.

Tencent recently is also reportedly in talks with Kuaishou, its another investee and a challenger to ByteDance, to form a joint venture focusing on game streaming. Kuaishou launched its own similar initiative which turned into a flop.