Tue, Aug 13, 2019 - Page 13 News List

The billion-dollar race to become China’s game-streaming boss

With superstar players, millions of fans and a US$3 billion industry on the line, game-streaming rivals Douyu and Huya are duking it out to become the Twitch of China

Bloomberg

Huya declined to make executives available for an interview.

The cutthroat competition has edged out smaller players, including Panda TV (熊貓直播), Liu’s previous employer. Its downfall has made way for Tencent (騰訊) to dominate game-streaming in China.

The social media giant has its own e-sports site, called eGame (企鵝電競), in addition to backing Douyu and Huya. It owns a 37.2 percent stake in Douyu and 34.6 percent in Huya.

Tencent didn’t respond to requests for comment.

Chen Shaojie, 35, founded Douyu five years ago, inspired by Twitch’s success. He says the company’s advantage over Huya is its bigger user base and wider game offerings, which in time will help it generate more revenue.

“Top streamers are extremely valuable for us,” said Chen, who owns a 13.3 percent stake in Douyu. “After we’re public, we’ll become more experienced with monetization.”

As a public company Douyu will also come under more scrutiny. Streamers often need to spend their own money to buy fan support — a common industry practice that calls into question whether company revenue is inflated.

Soon after Douyu signed on Liu in March, he spent nearly 20 million yuan (US$2.9 million) to buy himself votes during Douyu’s annual online idol competition. Half of that money goes to Douyu, and the other half returns to Liu’s pocket. Douyu’s CEO confirmed this.

“These ‘fake’ votes will be still counted as revenue as, under accounting standards, the streamer will be considered a paying customer,” said Global Equity Research’s George. “Douyu’s focus on top streamers makes it more susceptible to this issue compared to Huya.”

Censorship is always another concern. Accounts with millions of followers can get wiped in a day if regulators deem what they post improper. Last year, a top performer got banned because she made fun of Japan’s invasion of China.

Liu learned from their mistakes. He stopped smoking on camera and even donated two million yuan (US$290,000) to a school in one of China’s poorest counties.

“Your personality and what you say and do can have a huge influence on fans,” Liu said. “You have to be careful about a lot of stuff.”

Companies like Douyu deploy armies of censors to police virtual content that falls afoul of Beijing. There’s no tolerance for the slightest political satire.

No potential risk is too small: Douyu originally planned to throw this year’s carnival at the end of May, but postponed the event for two weeks because authorities were wary of public gatherings around the 30th anniversary of the Tiananmen Square crackdown, according to Douyu organizers who asked not to be named to discuss sensitive matters. Douyu’s CEO said the delay was due to road construction near the venue, citing a previous company statement.

Liu is aware that he won’t be this famous forever. Millions of streamers on Douyu toil for more than four hours a day on the platform, and the rise of a new star player could mean less income for Liu.

So he’s planning for the future. In August last year, Liu opened a training camp, which grooms about two dozen teenagers for top games like League of Legends and PlayerUnknown’s Battlegrounds. He earns money when e-sports clubs sign on his proteges.

Earlier this year, Liu also led a 125 million yuan (US$17.7 million) funding round for a talent agency called Elephant Entertainment, which recruits and promotes thousands of streamers. In April, it garnered a 1 billion yuan (US$142 million) valuation and the backing of Tencent.

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