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Douyu, China’s Twitch backed by Tencent, files for a $500M U.S. IPO

Douyu, a Chinese live streaming service focused on video games, has filed with the U.S. Securities and Exchange Commission as it prepares to raise up to $500 million on the NYSE less than a year after its archrival floated on the same stock market.

Wuhan-based Douyu, whose name translates as “fighting fish”, is the second Twitch -like service backed by Tencent to go public in the United States. Its direct competitor Huya, who has a similarly fierce name “tiger’s teeth” and also counts Tencent as a major investor, raised $180 million from its NYSE listing last May.

It’s not surprising for Tencent to hedge its bets in esports streaming, given the giant relies heavily on video games to make money. For example, Tencent can use some of its portfolio companies’ ad slots to get the word out about its new releases. Indeed, Douyu’s filing shows it received a hefty 27.48 million yuan ($4.09 million) in advertising fees from Tencent last year.

As Douyu warns in its prospectus, its alliance with Tencent can be tenuous.

“Tencent may devote resources or attention to the other companies it has an interest in, including our direct or indirect competitors. As a result, we may not fully realize the benefits we expect from the strategic cooperation with Tencent. Failure to realize the intended benefits from the strategic cooperation with Tencent, or potential restrictions on our collaboration with other parties, could materially and adversely affect our business and results of operations.”

But there are nuances in the giant’s ties to China’s top two live streaming services that could mean more affinity between Tencent and Douyu. The social media and gaming behemoth is currently Douyu’s largest shareholder with a 40.1 percent stake owned through its wholly-owned subsidiary Nectarine. Over at Huya, Tencent is the second-largest stakeholder behind YY, the pioneer in China’s live streaming sector that had spun off Huya.

When it comes to the financial terms, the rivaling pair is in a head-on race. In 2018, Douyu doubled its net revenues to $531.5 million. Huya held an edge as it earned $678.3 million in the same period, also doubling the amount from a year ago.

Huya may have learned a few things about monetizing live streaming from 14-year-old YY as it managed to pull in more revenues despite owning 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 make money also diverge slightly. In the fourth quarter, 86 percent of Douyu’s revenues originated from virtual items that users tipped to their favorite streaming hosts, with the remaining earnings derived from advertising and more. By contrast, Huya relied almost exclusively on live streaming gifts, which made up 95.3 percent of total revenues.

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Screenshot of a Douyu live streaming session 

As Douyu grows its coffers to spend on content as well as technologies following the impending IPO, competition in China’s live streaming landscape is set to heat up. Just earlier this month, Huya raised $327 million in a secondary offering to invest in content and R&D. Like many other businesses anchored in content, Huya and Douyu depend tremendously on quality creators to keep users loyal. Both have offered sizable checks to live streaming hosts, promising to grow the internet celebrities into bigger stars.

And they’ve extended the battlefield outside China as emerging media forms, most exemplified by short video services Douyin (TikTok’s China version) and Kuaishou, threaten to steal people’s eyeball time away. Both bite-size video apps now enjoy a much bigger user base than their live streaming counterparts.

“We intend to further explore overseas markets to expand our user base through both organic expansion and selective investments,” noted Douyu in its IPO filing.

In a similar move, Huya’s overseas expansion is also well underway. “In addition to our vigorous domestic growth, we have successfully leveraged our unique business model to enter new overseas markets. We believe we are delivering long-term value through strategic investments in overseas markets in 2019 and beyond,” said Huya chief executive Rongjie Dong in the company’s Q4 earnings report.

Pro ‘League of Legends’ player fired after he abuses girlfriend during livestream

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Warning: This story is about an incident that is distressing.

A professional League of Legends player has fired from his team, after he beat up his girlfriend and inadvertently livestreamed the incident.

Chinese player Li Wei Jun, better known as “Vasilii” in the gaming world, was on Thursday livestreaming his gameplay of a match, which he proceeded to lose.

His girlfriend is heard in the background telling him not to lose his temper, especially during a livestream where many fans would be watching him.

“I told you not to speak in such a manner. You have a problem you know, you keep losing your temper,” she says. Read more…

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The biggest Call of Duty tournament shines light on growth of esports

 Esports is becoming a true spectator sport, but will the average Joe one day care about competitive League of Legends or Overwatch or Counterstrike the way they care about watching football on Sundays? A number of factors are at play for esports to garner the same level of popularity as mainstream sports like football, baseball, basketball, and futbol everywhere but the U.S, some of which… Read More

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New luxury internet cafes in China are ensuring gamers won't ever want to leave

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If all you’ve known about internet cafes are dingy darkened rooms where people stare into screens, you’ve got to see some of the new, slick gaming havens that are popping up in China.

The Wolfz 狼域电竞俱乐部 gaming lounge, opened this week, is a 1,700 square foot space in south China’s high-tech hub of Shenzhen. It’s got 230 computers, 11 large rooms to book, and 5 VIP rooms.

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It also has a spot for professional teams to live-stream their games, and for other gamers to watch live matches around a bar.

Wolfz is also owned by a huge Taiwanese pop star, by the way. 

Megastar Jay Chou is such a huge gaming fan that he owns a professional League of Legends team, called J-Gaming. Read more…

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Meet Orisa, the 24th 'Overwatch' hero

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This is Orisa, a quadrupedal robot with an automatic projectile cannon for an arm, and she is the latest hero to join the Overwatch roster.

Revealed today, Orisa is a new, versatile tank hero playable on the public test region on PC now and coming soon to all platforms. She is an omnic modeled after OR-15 defensive bots and was built by Efi Oladele, an 11-year-old genius who has only recently popped up in the Overwatch universe. Orisa’s self-professed primary function is “to keep you safe.”

Orisa has a wide range of abilities as a tank, all of which are laid out on her hero page on the Overwatch website. You can check them all out below: Read more…

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Gamers donated over $70,000 to get 'Ultimate Marvel vs. Capcom 3' to Evo 2017

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The fundraising war is over and the ninth game at the biggest fighting game tournament in the world is decided: Ultimate Marvel Vs. Capcom 3.

Multi-title fighting game event Evo 2017 is hosting nine different fighting game tournaments in July — eight chosen by the Evo tournament organizers and one chosen by the community. Instead of holding a simple multiple choice vote, though, Evo asked players and fans to vote with their dollars, with all proceeds going to the Make-A-Wish International charityUltimate Marvel Vs. Capcom 3 (UMVC3) came out on top, generating $71,690 in donations from 1,487 people over 15 days. Read more…

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