HUYA 2022 Q2 Financial Analysis: User Expansion and Operational Optimization Drive Sustainable Development

Facing some turbulence in the macro and regulatory environment, the live streaming industry in China has been under pressure over the past few months. And many companies across the sector have been adjusting their business strategies to ensure long-term development.

Huya, a leading company in China’s live streaming industry known for its game and e-sports content, has announced its Second Quarter 2022 financial results on August 16. Its total net revenues stand at 2.28 billion yuan ($339.7 million), with Non-GAAP net income 5.9 million yuan. Encouragingly, against the background of sluggish economy, the average mobile MAUs of Huya Live grew 7.7 percent year-on-year to 83.6 million. User stickiness has also improved, which is demonstrated by the growth of total average user time spent on Huya platform reaching 12% year-over-year. Additionally, Huya Live app’s next month user retention rate continues to remain above 70%.

Douyu, another live streaming platform in China, has adopted a different approach by cutting large costs in licensed content such as LPL, WRL, and MSI, which, according to its latest financial results of Q2 2022, led to a year-on-year average mobile MAU loss of 5 million to 55.7 million, with total net revenues at 1.83 billion yuan.

Dong Rongjie, CEO of Huya, gives an explanation at the conference call on Tuesday evening about the user growth. He believes that the user expansion can largely be attributed to consistent investment in quality content and innovative products that meet the core demand of users.

When it comes to the professional content on the Huya platform, which is among its major business advantages, the company broadcasted around 90 third-party e-sports tournaments in Q2 2022, with the total viewership of those licensed tournaments roughly at 608 million. Renowned tournaments such as LPL, Mid-Season Invitational (MSI) and King Pro League (KPL) maintained their leading positions in viewership. Furthermore, Huya’s self-organized e-sports tournaments and entertainment PGC shows also received remarkable achievements. The total viewership for self-organized content reached approximately 100 million.

It’s worth noting that over the second quarter of 2022, Huya pursued an ROI-led strategy – to give a closer look when it comes to procuring tournaments, so as to meet budget control goals while ensuring high-quality content offering, per Ashley Wu, Vice President of Finance of Huya, at the conference call. In addition, she also pointed out that Huya has taken some diligent efforts in improving operational efficiency and optimizing business expenses in a nimble way. Overall, Huya’s Q2 total operating expenses reduced by 17% quarter-over-quarter, and 21.6% year-over-year, after adjusting its overseas business, fine-tuning marketing channels, and streamlining internal processes. To be more specific, sales and marketing expenses decreased by 40% to 100.3 million yuan for the second quarter of 2022.

Furthermore, product innovation and greater integration into game industry will help Huya maintain an advantageous position in the industry. The newest version 10.0 of Huya Live app has deeply integrated community features that will enhance the user interaction experience.

More specifically, version 10.0 of Huya Live adds a social community called “Tiger Chit-chat” (“虎扯”社区). It features comprehensive content ranging from videos, images and text posts to game Q&As, strategies and events. The community also serves as a discussion board between users and their favorite broadcasters, enabling greater interaction between broadcasters and fans to cultivate deeper bonds during non-streaming hours. In that respect, users are more motivated to generate high quality UGC in the video category through algorithm-driven recommendations and operations. Furthermore, segments for different game titles and tournaments are also created, and official accounts operated by the game studios can join the community to provide the latest game information and strategies.

SEE ALSO: With Continued Focus on Innovation and Cooperation, Huya Q1 Mobile MAU Grows 8.5 Percent

Some may wonder the “community” concept is not that new. In fact, this foundation of communitization is deeply embedded on Huya platform through years of development. And most of its upgrade in features are born of trends dictated by users’ tastes. Huya’s achievements in product and value chain integration has actively pushed itself towards the vision of becoming a one-stop destination for comprehensive game-related services. Just as Dong Rongjie put it, “along with a more comprehensive offering, we aim to unlock more monetization opportunities going forward.”

Apart from implementing relevant business moves and strategies, Huya has also stepped up its efforts in innovating and upgrading risk control and compliance ecosystem by introducing a system that can automatically and effectively filter inappropriate audio content during live streaming without time delay. As a socially responsible corporate, in Q2 2022, more than 2,840 broadcasters on Huya platform joined campaigns to promote a healthier and more positive social environment, and performed approximately 27,000 hours of related livestreaming, covering a series of activities including rural revitalization,helping left-behind children, and environment protection education.

During uncertain times, Huya has continued to focus on its core strength while quickly making adjustments to adapt to the changing external environment, including strengthening monetization capabilities, optimizing cost and expense structure and fortifying business fundamentals to achieve sustainable business development over the long term. Just as Huya CEO said at the conference call, “our business is a resilient one, which we expect to rebound and prosper as market conditions stabilize. With that in mind, we remain focused on future opportunities.” With strategical measures taken, Huya is expected to achieve a healthy and sustainable development in the long run.