Tencent pulls plug on Twitch-like platform Penguin Esports as regulators freeze out the social media giant from new gaming licences

Tencent Holdings, which operates the biggest social media and gaming business in China, pulled the plug on its game streaming site Penguin Esports this week, another setback after antitrust regulators blocked the company’s plan to merge game streaming websites Douyu and Huya.

The move comes at a time when the Chinese government is trying to reduce youths’ indulgence in gaming, which is seen as a distraction to their growth. While the Chinese government has resumed issuing game licences, Tencent and NetEase, the two biggest players, have been left out in the two licence batches in April and June.

A notice on the six-year-old Penguin Esports’ website said that the company turned off the server and stopped operations of the site at 11:59pm on June 7, with contact information for users to reach out to customer services in case of inquiries. The service was also removed from app stores, including the mini-program that runs within Tencent’s super app WeChat.

The closure of the Twitch-like platform was announced by Tencent in April, when the company cited “changes in business development strategies” and suspended registration of new users and live-streaming hosts the same month.

Some streamers and users took to social media to bid farewell to the platform. “Goodbye Penguin, and thank you for taking care of me over the past few years and giving me room to survive,” streamer Hasaki said on microblogging site Weibo, as she posted pictures of trophies awarded by Penguin Esports.

Last July, Tencent’s attempt to merge Douyu and Huya, two video game live-streaming services that it controls, was blocked by the State Administration for Market Regulation (SAMR). Penguin Esports, a much smaller player than Douyu and Huya, would have been integrated into the merged entity under the previous plan.

With the merger plan scuffled, analysts see Tencent’s move to close Penguin Esports as a way to cut costs and reduce its involvement in the game streaming industry, which is facing intensifying competition from short video app Douyin, operated by TikTok owner ByteDance, and anime and video streamer Bilibili.

The gaming industry itself is under regulatory pressure, undergoing a slow recovery after licences were suspended for months in the past year. China’s regulator granted publishing licences to 60 online games on Tuesday, the biggest mass approval of titles since last July. However, neither Tencent nor NetEase were included in the latest approvals, continuing the 11-month drought for two of the biggest publishers globally.

The approvals come after the nod given to 45 titles in April, indicating that regulators could endorse new games on a regular basis as they did in the past.