As early as 2016, douyu live received the b-round investment of Tencent led investment, and Tencent invested twice before listing. And in the “Warring States era” of live game, live broadcast of tiger teeth has also attracted Tencent’s attention. Tencent completed a $460 million investment in Huya before it went public in 2018.
Tencent, as China’s largest game manufacturer and publicity platform, has provided flow, copyright, capital and other multi-dimensional help in the development process of douyu and Huya, which is the guarantee that Tencent can win in the “Warring States era” and stay in the top two of the game live broadcast. At present, their market share is about 80%.
Tencent’s help is not obligatory. In the round B investment of Betta, the sports live broadcast of Betta is directly incorporated into Tencent’s Penguin E-sports; Tencent has also become a major shareholder of the two leading companies.
according to the annual reports of douyu and Huya in 2019, Tencent holds 38% and 36.9% of the shares respectively. However, due to the design of different rights for the same share of Huya, Tencent has 38% and 50.9% voting rights in the two companies.
and on August 10, Huya also announced that Tencent had signed a share transfer agreement with huanju group, and signed a separate share transfer agreement with Dong Rongjie, CEO of Huya. Before September 9, 2020, Tencent will purchase 30 million class B ordinary shares of Huya from huanju group and 1 million class B common shares of Huya from Dong Rongjie.
after the completion of the transaction, Tencent will hold about 51.05% of Huya’s shares and hold about 70.40% of its voting rights. According to the rule that the proposals of listed companies usually need to be approved by shareholders with more than two-thirds of the voting rights, Tencent will almost completely control the decision-making power of tiger tooth.
people who know the investment style of Alibaba and Tencent all know that Ali is more like a “mother”, and the enterprises they like to see should be controlled by their side and operate according to Ali’s ideas. Tencent is more like a “father”, who likes to be a second shareholder, but only gives enough funds to the enterprises they like to develop and compete freely.
therefore, it is very common for Tencent to invest in several companies in the same industry and finally survive the fittest in the competition. Even if it is their own “own” children, if it is not as good as “son”, they will not hesitate to support the dominant side. The best example is that cat’s eye acquired the ticketing business of wechat from the second level entrance to the first level entrance.
However, this year, Tencent has successively sent senior executives to parachute Yuewen group, privatized e-Car and Sogou. All of us can see that Tencent’s “captive” investment style is changing to “paternalistic” investment style. This also makes the news that Tencent promotes the merger of tiger tooth and Betta more credible.
as the major shareholders of the two, the fight between douyu and Huya in recent years has consumed a lot of funds in the aspects of live broadcasting rights, advertisers and anchors. Although the scale of their revenue almost continues to increase, they always hover around the break even line. In particular, Betta did not achieve positive operating profit until the fourth quarter of 2019.
is not besieged by the recent besieged on all sides of the game: the game has a byte high jump and a high speed invasion. The B live station has taken the B broadcast rights of the League of heroes S for three years. WeChat’s payment has not been able to exceed the market share of Alipay. The Tencent video has not yet knocked out Iqiyi and ushered in the mango hypermedia. In a word, Tencent’s performance seems to be expressed in action – the time to close the net, ready to strike hard.
Tencent proposes that tiger tooth or its subsidiaries purchase Betta, and the betta shareholders will exchange their respective Betta shares for an agreed number of class a common shares of the newly issued company. This is similar to the way Youku and Tudou merged before.
both Youku and Tudou were listed companies in the US stock market at the time of merger. After the merger, the new company was named Youku potato Co., Ltd. the original shareholders of Youku owned about 71.5% of the shares of the new company, and the original shareholders of Tudou owned about 28.5% of the shares. Tudou delisted from US stocks after the merger.
but after the announcement of douyu and Huya on August 10, the stock prices of both companies fell sharply. As Tencent suggested that tiger teeth or its subsidiaries purchase Betta, the original market value of tiger teeth fell even more. By the end of the day, the market value of Betta and tiger teeth was 4.435 billion US dollars and 5.277 billion US dollars respectively.
douyu and Huya, as the two giants of China’s game live broadcasting, have high brand awareness and similar market share. Without an absolute advantage, Betta may not accept the result of delisting. Betta said the board planned to review and assess the potential deal and had not made any decision.
if Betta really accepts Tencent’s proposal, according to the results of previous merger cases, the newly established company will adopt the joint CEO system at the beginning, and the current CEOs of douyu and Huya will jointly assume the post. The boards and management of both sides will be integrated, but the acquiree will have fewer seats in the management.
in the long run, in addition to meituan and Dianping, which have realized the independent operation of the two brands after the merger, other merger cases, such as Youku + Tudou, 58 Tongcheng + ganji.com, Ctrip + qunar, etc., have been rapidly weakened. Until the “baiplay game creator support plan” was launched in people’s line of sight, this year it will be broadcast live Activities such as black and anchor against AI have attracted a lot of attention in the May 5th black Festival. By the end of May this year, more than 220 million users had been Kwai live live broadcast live, and 300 million users had broken short live video games. The total number of monthly live users of fighting fish and tiger teeth was only 7 million, and there were about six million overlaps.
station B not only won the exclusive broadcasting rights of the League of heroes, but also signed up with well-known E-sports players such as Uzi. Moreover, station B has developed rapidly recently, with more than 100 million monthly live users and younger users. Naturally, it has advantages in developing live game broadcasting.
although douyu and Huya have developed from game live broadcasting platform to pan entertainment live broadcasting platform, the development of live broadcasting in other fields is not warm. The merger of the two companies can indeed form a greater market monopoly and prevent the invasion of foreign enemies.
However, when Chen Shaojie and Gu Feng are still in a dominant position in the market, who would be willing to give up their “children” raised by themselves? Are entrepreneurs, who is willing to “rely on others”?
when meituan and Volkswagen review merged, Zhang Tao, founder of Volkswagen review, burst into tears. This is a rare example of maintaining the original brand after the merger. Most merger cases are under the banner of “co CEO” and “independent brand operation”. In fact, the brands of the weak or acquired parties are constantly marginalized and tend to disappear.
so, if the founding team is really trying to do a good job in the company, rather than simply pursuing profits, how can the founding team give up when it meets an enemy? In those years, when the 58 city crushed the market net, the merger was hindered in persuading the founding team. The main reason was that the founder Yang brothers could not accept it emotionally, and now the betta is on a par with tiger teeth.
after several rounds of financing, the shares of the founders of the company have been diluted seriously. If the structure of different rights for the same share is not set up in advance, it is inevitable that the right of discourse will fall into the hands of capital.
and under multiple rounds of financing, the probability of overlapping investors of the same industry’s leading companies is also very high. Of course, the two companies should consider the common interests of different industries. If the investment time is long and there is no good exit way, the capital strength behind the two sides will even jointly promote the merger.
didi and kuaidi merged under the pressure of investors such as Alibaba and Tencent. Later, Uber China was forced to accept the merger agreement with didi under the promotion of investors such as Hillard capital and Tiger Fund. 58 the merger of didi and kuaidi could not be separated from the “help” of Tiger Fund. The merger of meituan and Dianping was also vigorously supported by shareholders of Ali, Tencent, Sequoia and Hillhouse capital support.
this is the best time for small and medium-sized companies in the sunrise industry or the first tier companies in the mixed war period, because the Internet’s thinking of burning money and enclosing land has been accepted by the market, and all kinds of capital are willing to provide capital and resource support for them. Capital, technology, flow support, you can find “thigh” for anything you need.
this is also the worst time, because if we rely on the power of capital, we may lose the decision-making power and let it be at the mercy of capital. If we do not accept the help of capital, we may be burned on the road of growth, even if we have a clear development plan. Companies that are used to “holding their legs” are likely to lose inventory capacity completely after capital withdrawal.
capital emphasizes fast development and high return, which may be contrary to the essential characteristics of some industries. When the industry develops to a certain extent, capital wants to form monopoly and integrate the companies in hand, which is also unstoppable in the case of imperfect anti-monopoly law in China. Small and medium-sized enterprises that need financial support will be in a dilemma when they step into the torrent of capital.
the simplest way to accept help and firmly grasp the decision-making power is to make plans in advance with different rights for the same share. The management must have the absolute proportional advantage of voting rights.
but this is not enough. What’s more important is to improve their own uniqueness, even if they have the advantage that others don’t have in a certain detail, so that they can have good cards on the negotiation table and have the right to choose investors, rather than be selected by others.