Last October, China’s two largest gaming streaming services Huya and DouYu announced a merger. However, then the deal turned out to be questionable — it attracted the attention of the local antimonopoly service. The companies themselves are positive, but Tencent, which controls them, is rumored to be concerned about the situation and has already discussed it with the authorities.
Recall that the merger of Huya and DouYu under the leadership of Tencent should be completed in the first half of 2021. It is assumed that after that, the companies, together with another streaming service Penguin e-Sports, will create a Chinese analogue of Twitch, the total valuation of which will be up to $ 11 billion.
That’s just the new service will control almost 90% of the Chinese gaming streaming market. Most likely, it was this moment that the State Administration of Market Regulation of China (SAMR) did not like.
According to Reuters, the antimonopoly service became interested in the deal in December. Before that, the regulator did not closely monitor the merger, but at the end of November, China began to tighten antitrust rules that online platforms are required to comply with. Probably, the merger of Huya and DouYu partly violates the rules introduced.
According to a source directly familiar with the details of the deal, so far SAMR has only conducted a “lengthy check” and has not told the companies anything specific.
However, this whole situation worries Tencent. The other day, the head of the corporation met with representatives of SAMR, where he discussed the nuances of antimonopoly legislation. Three people close to the company told Reuters about this. According to sources, Tencent is ready to make some “concessions” in order to get the consent of the authorities for the merger. This issue could have been discussed at the meeting.
Nevertheless, it is not known whether the deal between Huya and DouYu was mentioned at all during the meeting. According to Tencent President Martin Lau, it was an ordinary meeting that the corporation arranges from time to time.
The leaders of Huya and DouYu have not commented on the interest from the Chinese authorities. They indicated that the merger is still ongoing, but they still need to get the approval of all regulatory authorities.
After we announced a potential merger with DouYu last October, we filed the relevant documents with the U.S. Securities and Exchange Commission. And in China, we voluntarily submitted a declaration to SAMR. At the moment, the check is not over.
Financial Director Huya
It should be noted that now the total audience of streaming services Huya and DouYu has 353 million people. In 2020, Huya’s revenue reached $1.67 billion, and DouYu’s revenue reached $1.47 billion.