Tencent to Merge Douyu and Huya to Compete with Bilibili and Kuaishou

According to Bloomberg, Tencent is planning to consolidate Huya and Douyu, the two biggest gaming-focused live-streaming platforms in China. The proposal has been raised to the level of the company’s general office and the merger can be completed within the year if the company moves fast enough, according to a Chinese media outlet. Tencent is already Huya’s biggest shareholder and also owns over a third of Douyu.

Reuters cited sources familiar with the matter that Tencent seeks to control or at least become the biggest shareholder of the merged entity. If completed, the deal would create an online game streaming giant with more than 300 million users and a combined market value of $10 billion, further solidifying Tencent’s lead in Chinese games and social media.

SEE ALSO: Huya Stocks Rise Over 7% Against The Market, Could Merge With Douyu By the End of This Year

According to data from MobTech, the combined entity will take up to 80% of the market. The source also said that a merger could also involve eGame, Tencent’s own streaming site and ranked No. 4 in the country. The potential merger will significantly lowered the cost of competition in the game live-streaming industry, while giving the new platform an edge in competition with Bilibili, a YouTube like video platform that is also marching into the esports realm.

Both Douyu and Huya have not responded in regards to the issue. Douyu’s shares surged 18% in pre-market trade in New York, while Huya soared 15%. Tencent climbed 2% to a two-week high in Hong Kong.

From 2019, the League of Legends World Championship Series, the most popular esports game in China’s gaming community, started to adopt a new auction system to sell its exclusive run in China. Bilibili won 3-year exclusive broadcasting rights for 800 million yuan over competitors including Douyu and Huya. Kuaishou Esports Livestream, a services backed by Kuaishou, Douyin’s biggest rival in China, is also pushing into the game streaming realm by signing various professional esports players.

NetEase News cited a source with direct knowledge of the matter that “To Tencent, Huya is a pawn, Douyu is a friend, while Kuaishou and Bilibili are opponents.” The source also said that there is a high chance that Douyu and Huya will be able to keep their independent operation team after the consolidation.