Douyu, China's Twitch Supported by Tencent, Files for a $ 500M US IPO – TechCrunch

Douyu, a Chinese video streaming live streaming service, has filed with the US Securities and Exchange Commission as it prepares to raise up to $ 500 million on the NYSE less than a year after the archive movie flows on the same stock market.

Wuhan-based Douyu, whose name translates as "fighting fish", is the second Twitch -like service backed by Tencent to become public in the United States. Its direct competitor Huya, which has a similarly fierce name "Tiger's teeth" and also counts Tencent as a major investor, increased $ 1[ads1]80 million from its NYSE listing in May this year.

It is not surprising that Tencent hooks up his games in esports streaming, giving the giant a strong trust in video games to make money. For example, Tencent can use some of its portfolio companies to get the word out about their new releases. In fact, Douyu's filing shows it received a hefty 27.48 million yuan ($ 4.09 million) in Tencent's advertising fees last year.

As Douyu warns in the prospectus, the alliance with Tencent can be tough.

"Tencent can use the resources or attention of the other companies it is interested in, including our direct or indirect competitors. As a result, we cannot fully realize the benefits we expect from the strategic partnership with Tencent. The intended benefits of the strategic partnership with Tencent, or potential collaborations with other parties, can significantly and negatively affect our business and business performance. "

But there are nuances in the giant's ties to China's top two live streaming services such as can mean more connection between Tencent and Douyu. The social media and gaming behemoth is currently Douyu's largest shareholder with a 40.1 percent stake owned by the wholly owned subsidiary Nectarine. Over at Huya, Tencent is the second largest stakeholder behind YY, pioneered in China's live streaming sector that had spun off Huya.

Regarding the financial terms, the rival pairing is in a head-on race. In 2018, Douyu doubled its net income to $ 531.5 million. Huya benefited when it earned $ 678.3 million over the same period, and also doubled the amount a year ago.

Huya may have learned some things about making money from streaming from the age of 14 YY as it managed to withdraw more revenue despite having a smaller user base. While Douyu claimed 153.5 million monthly active users in the fourth quarter, Huya had 116.6 million.

How the two earn money also diverges a little. In the fourth quarter, 86 percent of Douyu's revenue derives from virtual objects that users tipped to their favorite flowing hosts, with the remaining revenue from advertising and more. In contrast, Huya claims almost exclusively on live streaming gifts, which accounted for 95.3 percent of total revenue.

Screenshot of a Douyu live streaming session

When Douyu grows his boxes to spend on content as well as technologies following the upcoming IPO, the competition in China's live streaming landscape is set to warm up . Just earlier in the month, Huya increased $ 327 million in a secondary bid to invest in content and R&D. Like many other businesses rooted in content, Huya and Douyu rely heavily on quality creators to keep users loyal. Both have offered great controls to live streaming hosts, promising to increase the internet celebrities to larger stars.

And they have expanded the battlefield outside China as new media, most exemplified by short video services Douyin (TikTok & China's 19459010 version) and Kuaishou, threatening to steal people's eyeball time away. Both bit-TV apps now have a much larger user base than their live streaming colleagues.

"We intend to further develop overseas markets to expand our user base through both organic expansion and selective investment," Douyu noted in its IPO filing.

In a similar way, Huy's overseas expansion is also well underway. "In addition to our strong domestic growth, we have successfully exploited our unique business model to enter new overseas markets. We believe we deliver long-term value through strategic investments in overseas markets by 2019 and beyond," says Huya's CEO Rongjie Dong in the company's Q4 result report.