China's Internet giant Tencent increases investment in livestreaming

APD NEWS

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Internet giant Tencent Holdings Ltd is looking to establish a clear lead over rivals in China's livestreaming market with a new round of investments, adding up to over 1 billion US dollars, in the industry's top firms.

YY Inc., a leading livestreaming social media platform in China, announced on Thursday that its subsidiary Huya Inc. has secured 461.6 million US dollars financing from Tencent.

Though YY has a controlling stake in Huya, Tencent got approval to purchase additional Huya shares at a fair market price to gain 50.1 percent of the voting power.

Earlier on the same day, Wuhan Douyu Network Technology Co Ltd - one of Huya's biggest competitors - revealed its latest 630 million US dollars' worth of fundraising also came from Tencent. Douyu went online in 2014 and Tencent has participated in its series B and C rounds of financing, which totals to 1.6 billion yuan (252 million US dollars), but it is the first time that the technology firm is supporting Huya.

The livestreaming market is booming in China. Data from China Internet Network Information Center shows that the industry's user base was 422 million by the end of last year and that, for video game content, the audience is 224 million – up 50 percent from 2016.

Huya and Douyu are the top two firms in terms of market penetration rate and daily active user volume, according to Shenzhen-based big data service provider Jiguang.

The two platforms account for 50 percent of the market share and the situation will be stable for a long time. Tencent's investment in the firms could "make the company become the dominant player in the livestreaming market, like it is in the video game market," Dong Zhen, an analyst with domestic consulting company Analysys, told China Daily.

He added that these platforms could also bring in new users to Tencent's gaming products, further strengthening its position in the gaming sector.

Liu Jiehao, an analyst with research firm iMedia Research, said Tencent's investment will bear fruit soon, as Huya and Douyu are both planning to go public this year. Their estimated value is reportedly about 2 billion US dollars each.

He believes "the key to win the competition in livestreaming platforms is the quality and quantity of celebrity hosts," a resource that needs large capital support. "So the Tencent investment is significant for Huya's and Douyu's development."

Tencent will have a powerful impact in the livestreaming market in the short term, he said, but it is hard to say if other Internet giants would utilize the same method to snatch celebrity hosts and rapidly increase their market participation.

In addition, he noted that another risk is that the government has been tightening policy supervision on the industry lately, so healthy content is important. Technology information provider TMTpost said about 70 livestreaming platforms were shut down in the first half of 2017.

(CHINA DAILY)