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Tencent in talks to create US$10 billion video game-streaming giant with Huya, DouYu merger
- That deal would create a large video game-streaming platform with more than 300 million users
- China’s video game-streaming market is projected to generate US$3.4 billion in revenue this year
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Tencent Holdings is driving discussions to merge China’s biggest video game-streaming platforms Huya and DouYu International Holdings, people familiar with the matter said, in a deal that would allow it to dominate the US$3.4 billion arena.
The Chinese video games and social media titan – which owns a 37 per cent stake in Huya and 38 per cent of DouYu – has been discussing such a merger with the duo over the past few months, although details have yet to be finalised, said the people, who asked not to be identified because discussions are private. Tencent is seeking to become the largest shareholder in the combined entity, one person said.
A deal would create an online giant with more than 300 million users and a combined market value of US$10 billion, cementing Tencent’s lead in Chinese video games and social media.
Faced with rising competition for advertisers from ByteDance and its rapidly growing stable of apps, the WeChat operator would be able to sell ads across an expanded content network. Huya and DouYu would keep their respective platforms and branding while working more closely with Tencent’s own e-sports site eGame, said the people.
Douyu’s shares surged 18 per cent in pre-market trade in New York, while Huya soared 15 per cent. Tencent climbed 2 per cent to a two-week high in Hong Kong.
“As the major shareholder of both platforms, Tencent would benefit because a merger would remove unnecessary competition between them,” Bloomberg Intelligence analyst Vey-Sern Ling said. “The enlarged scale can also help to drive cost synergies and fend off emerging competitors.”
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