On the evening news of Beijing time on August 10, douyu (NASDAQ: Doyu) announced that it had received a preliminary non binding proposal from Tencent on the strategic merger of Betta and tiger tooth (NYSE: Huya). At the same time, (NASDAQ: YY) issued an announcement announcing that it would issue 30000000 shares of Huya class B common shares, with a total value of $810 million in cash.
as of Monday, August 10, the market value of Betta was US $4.85 billion, and that of Huya was $5.85 billion. After the disclosure of the merger news, the two companies’ pre market share prices began to rise in a straight line.
in other words, the hand in hand of tiger teeth and fighting fish will produce a new content company with a market value of more than 10 billion US dollars and a live game platform with more than 300 million live users. Tencent, as a dealer, will further consolidate its dominant position in the game track after the marriage.
after the long-term merger, Tencent led the investment in round B financing of Betta. Subsequently, Tencent, which adheres to the principle of double insurance, invested $461.6 million in tiger teeth on March 8, 2018, and continued to increase the size of fish fighting with $630 million on the same day.
in April this year, Tencent acquired more shares of Huya from huanju group again, increasing its voting rights in Huya to 50.1%; meanwhile, it held 38% of the shares of douyu, holding the position of the largest shareholder of douyu. Since then, the fate of the two “big brothers” in the live game industry has been firmly grasped by Tencent.
in May this year, tiger teeth and Betta released their first quarter financial reports one after another. At the same time, the payment level of Huya is decreasing, and the growth rate of revenue is relatively slow. The total revenue realized in the first quarter decreased by 2.2% month on month. This is the first time that Huya’s live broadcasting revenue has declined month on month.
on the other hand, the data of net profit, Mau (monthly living users) and paying users of Betta have reached the historical best, but the average Mau continues to decline. This means that the willingness of users to pay for Betta has increased, but the growth of users is facing a bottleneck.
since both of its top two generals have their own worries, Tencent, the eldest parent, has to go out in person to coordinate and tighten its control over strategic investment companies.
in the past, the official website, Post Bar Forum, app store and wechat were used as publicity channels for Tencent games. Due to the limited source of users and low accuracy, the communication effect was proved to be average. In contrast, game live broadcasting is more generative for players. Game KOL can quickly gather a group of fans in a short time, promote game innovation, enhance player activity, and then drive the ability to pay for conversion, and ultimately lengthen the life cycle of a game.
Tencent, which holds a large number of head games IP and E-sports events, has spent more than one billion US dollars to take a strong stake in tiger teeth and Betta. Naturally, it is to seize the propaganda position of this advantage and drain its own e-sports industry through live games.
the most significant benefit after the merger is that the traffic volume rises again and the user stickiness is strengthened. As far as Tencent is concerned, only by unifying operations and integrating the downstream link of the live broadcast platform can it better connect with the R & D and distribution of the upstream end and open up the overall layout of the entire industrial chain.
looks at the outside world, and is the most striking two wolf in the live broadcast market in 2019. The Kwai Fu and B stations are speeding up the mess. At this year’s Chinajoy2020 global competition conference, Tang Yuyu, vice president of Kwai game, has revealed that the number of live users has been over 220 million by the end of May this year, and 300 million of users in the short live video games have been Kwai Yue. This is close to the sum of Betta and tiger’s teeth.
cut short video content from users to live broadcast, relying on this efficient path, Kwai Tai sucks away many users and income of live platform. The Kwai Fu with the advantage of flow is easy to extend around the competition, and then create a new game content ecosystem.
on the other side, station B is also making continuous bets on the e-sports industry. It not only attracted relevant teams, but also invested 800 million yuan to win the exclusive broadcast right of China in the global finals of League of heroes. In addition, more than 44 billion videos of E-sports content have been played on our website, and there are a large number of native game up as resource reserve B station, with amazing potential.
is backed by the loud byte of the huge flow cell, and also has a high profile in the tiktok game, which has performed well in the casual game business. Tencent understands that no matter which side it is, it is full of uncontrollable factors. The addition of new players makes it more difficult for the already saturated user pool to grow, and the future competition will only be more intense.
in this integration, Tencent undoubtedly aims to maximize the benefits of live game broadcasting, reduce the internal friction of Betta and tiger teeth, and leave no room for other opponents to overcome.
tiger teeth and Betta have been sticking together for many years. One is good at live show broadcasting, and the other is better at game anchor matrix. Although there are differences in strategy, there is no gap between the performance of the two in terms of performance. If the two financial reports are put together, the most intuitive feeling is.
from the business point of view, the revenue components of the two are basically the same, including live broadcasting, advertising and others. Specifically, the revenue of Q1 live broadcasting business in Huya in 2020 is 2.275 billion yuan, with a year-on-year growth of 46.5%; while the revenue of direct broadcast business of Betta Q1 is 2.113 billion yuan, with a year-on-year growth of 56.0%, and the revenue of both sides in the live broadcasting business accounts for more than 90% of the total revenue. In terms of revenue growth and net profit, the gap between the two is gradually narrowing.
Betta and tiger tooth have their own advantages in terms of income structure and user attributes, but on the whole, both of them are basically equal in terms of scale, market value and revenue. Under such a high degree of homogenization, it is not significant for the two giants to continue to compete, which will only increase internal friction. Turning to consolidation is a better deal.
but after the merger, there will inevitably be a situation in which one party dominates and the other party gradually fades out. So, who will be the boss among the betta, tiger teeth, and even the “son” Penguin competition? How to distribute the interest pattern? At present, there is no more information disclosure including the management of the new company, which will become the focus of the market in the future.
under the pressure of fighting fish competition, tiger tooth is trying to improve various data, including program types, revenue and monthly live users, in order to have a greater voice after the merger.
as rivals of equal size, merger does not mean peace and security. Referring to the previous didi and kuaidi, meituan and Dianping, Ctrip and qunari, today’s merger and integration is no longer a big fish eating a small fish. After the strong and strong join hands, both sides have a stronger stance in the selection of core team, personnel arrangement, organizational adjustment or separation, product differentiation and positioning. No matter who becomes the leader of the new platform, another platform will usher in a batch of blood changes.
Moreover, after the marriage, although the relationship between the two companies as rivals no longer exists, the long-term pressure on the revenue and user growth of the two listed companies has not disappeared.
although Huya and douyu have become a bigger company together, it is not easy to break in. After the merger, it is still a long way to go to realize resource integration, balance the anchor linkage between platforms, share the game copyright, and find more new profit growth points.