HUYA 2022 Q3 Earnings Analysis: Efforts in Technology Advancement, Product Upgrade and Quality Content Help Improve Huya’s Resilience in Uncertain Environment

China’s major game live streaming platform Huya Inc., has announced its third quarter 2022 financial results on November 15. Although the macro and regulatory sentiment has kept evolving that could impact the live streaming industry as a whole, Huya has recorded quarter-on-quarter growth in the total net revenues and net income, with the average mobile MAU of Huya Live increasing steadily to 86 million.

To be more specific, Huya’s total net revenue for the third quarter stood at 2,378.5 million yuan ($334.4 million), with Non-GAAP net income at 106.1 million yuan ($14.9 million). The increase of average mobile MAU of Huya Live, according to Dong Rongjie, CEO of Huya, was attributed to enhanced interactive experience offerings, as well as Huya’s appealing gaming and entertainment content. Moreover, the user growth is rather encouraging, as on one hand, it was increased from a relatively high base from the same period last year; and on the other hand, the company has adopted a more stringent marketing channel spending strategies to help contain costs, which can be seen in Huya’s continued efforts in increasing efficiency and reducing costs over the third quarter.

According to Ashley Xin Wu, Huya Vice President of Finance, Huya has focused on refining operations within the organization over the third quarter of 2022. Regarding operational optimization, Huya began to make strategic adjustments to its overseas business to allocate resources to key areas since April. Ashley said at the conference call that these initiatives have resulted in a more streamlined and efficient business, and that the company “looks forward to further benefits from these adjustments in our overseas business.”

Additionally, savings from broadcaster-related costs and bandwidth usage also helped reduce the quarter’s overall costs. With some optimization initiatives that lowered sales and marketing expenses, Ashley said that “our business has become more streamlined, and we reduced our total operating expenses by 27.3% in the third quarter year-over-year.” She also expressed that against the backdrop of volatile market environment, the company will continue to be prudent and solidify its business and financial foundation.

As a game live streaming company in China, Huya’s leading market position is strengthened by its long-term focus on improving live streaming technologies, exploring new product features and enriching quality content.

Regarding product and technology advancement over the third quarter, Huya has been exploring the application of virtual live streaming technologies, which include developing digital humans and offering avatar live broadcasting tools on its platform. Such virtual streaming technologies can be integrated into broadcasting sessions to help create more immersive viewing experiences and inspire more interesting user interactions.

To demonstrate, Huya introduced a “Virtual Live House” tool on its mini tool’s open platform. In the virtual live scene where the background can be separated and cut out, streamers images and actions are automatically recognized. The audience can also have their own virtual characters to control and interact with the steamers. Based on these advantages, Huya partnered with CrossFire game and launched the industry’s first virtual viewing feature for tournament live broadcasting during the finals of CrossFire Pro League in August.

And building on the success in the CrossFire event, Huya set up an enhanced virtual venue for League of Legends Worlds 2022 to offer an immersive virtual viewing option. Additionally, in order to provide users more precise game scenes across devices, Huya has also extended the HDR-capable display support for match viewing for mobile app, webpage and PC clients for both live streaming and on-demand videos. Furthermore, there is a “Tournament Assistant” feature for the event that makes it easier for users’ access to tournament-related information in real-time without leaving the live page. These features have helped sustain Huya’s leading market share in China for this highly-anticipated Worlds 2022.

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Over the years, Huya has continued its investments in content enrichment and diversification, especially in professional e-sport tournaments. 95 such tournaments were broadcasted over the third quarter, with total viewership of those events reaching approximately 660 million, representing growth of 12% year-over-year. In the third quarter, the most popular included the summer seasons of League of Legends Pro League (LPL), King Pro League (KPL), and CrossFire Pro League (CFPL), and ESL Pro League Season 16. Per data provided at the conference call, the number of peak concurrent users of the LPL Summer increased by 57% compared with the previous edition.

Self-organized e-sports tournaments and entertainment PGC shows are another source of quality content. Huya broadcasted 23 events during the third quarter, generating total viewership of approximately 100 million. Two major Huya-branded tournaments, the Thunder series of Honor of Kings and the PeaceKeeper Elite All Star Summer Cup, have continued to perform well in the summer.

All these efforts above were paid off. According to Huya, In the third quarter, Huya Live’s average mobile MAU increased to 86 million, the average daily time spent of Huya Live mobile app’s users increased by about 7% year-over-year, and the app’s next month user retention rate stabilized at above 70%. Even though the on-going macro headwinds have to a certain degree affected the broader industry and the company, Huya CEO Dong Rongjie believed that by continuing to drive live-streaming technology improvements, explore new product features and enrich quality content will improve Huya’s resilience in uncertain market conditions. In this way, according to Dong Rongjie, it can help Huya “better engage with our users, placing us in a stronger position to capture future opportunities in the game and live streaming market.”