The proposed merger of the two Twitch-like livestreaming platforms in China, DouYu International Holdings Ltd. and HUYA Inc., will see lower content acquisition cost and strengthen Tencent Holdings Ltd.’s dominance in the online gaming sector in China, analysts said.
Tencent will hold 67.5% on a fully diluted basis in the combined company, making it the largest shareholder. It currently owns a 37% stake in Huya and a 38% stake in Douyu.
Huya agreed to acquire all outstanding shares of DouYu via a stock-for-stock merger, according to an Oct. 12 announcement. Upon completion of the merger, Huya and DouYu’s shareholders will each hold about 50% shares of the combined company on a fully diluted basis. In addition, DouYu will become a privately held and wholly owned subsidiary of Huya.
“The merger definitely creates a situation with a key player owning the majority of the revenue and traffic in the market,” Benjamin Cavender, managing director at China Market Research Group said.
Huya, DouYu and Tencent’s live-streaming branch Penguin esports, together accounted for nearly 86% of the game live-streaming market of China, based on the number of active users as of March 2020, according to data compiled by MobTech.
Huya posted 168.5 million monthly active users in the April-to-June period of 2020, while DouYu had 165.3 million users during the same period.