The termination of Huya Douyu merger, a comprehensive interpretation of “the first case of prohibition of Internet mergers and acquisitions”


187 days.

The strategic merger of Huya and Douyu, promoted by Tencent, was finally suspended after six months of review.

This is the first prohibited investment merger in the Internet industry.

“Regulatory methods are richer and more sophisticated.” A researcher in the field of competition law told Entertainment Capital. Compared with the huge fines imposed on enterprises after the result of monopoly, this “pre-regulation”, whether it is It is more beneficial for maintaining healthy competition in the market and for enterprise development.

In response to this, Tencent immediately issued an announcement that it will comply with the review decision, actively cooperate with regulatory requirements, operate in compliance with laws and regulations, and earnestly fulfill its social responsibilities.

When the merger terminates, where will the game live streaming industry go in the future? An obvious conclusion is that there will not be only Douyu and Huya in this field.

Kuaishou, Station B, and even Tencent’s WeChat video account are all “eyes” on the game live broadcast industry.

A person close to Station B told Entertainment Capital that after the merger of the two game MCNs, Little Elephant and Big Goose, the original management team of Big Go Culture was recruited at Station B, and the budget for the game live broadcast was significantly increased. Expanded from one floor to three floors”.

“From 2015 to the beginning of 2020, it was the 1.0 era of live game broadcasting. It was like a few children playing on their own, playing in a fairly small market. The final result is that the two seem to be about to merge together. “An investor who pays attention to the field of game live broadcast said: “Suddenly, there is a new door in front of you. When you go in and see, it is a brand new and bigger battlefield, and the guys in the battlefield are all bigger. Giants.”

“The first case of prohibiting mergers and acquisitions on Internet platforms”

The state has taken a solid step forward in anti-monopoly supervision.

On July 10, 2021, the State Administration for Market Regulation issued the “Decision on the Anti-Monopoly Review Prohibiting the Merger of Huya Company and Douyu International Holdings Co., Ltd.”.

According to the announcement, in terms of market share alone, Huya Douyu’s market dominance after the merger is self-evident. The market shares of Huya and Douyu exceed 40% and 30% respectively, totaling more than 70%; in terms of the number of active users, the market shares of the two parties exceed 45% and 35% respectively, totaling more than 80%; from the perspective of anchor resources, the market shares of both parties are equal. More than 30%, totaling more than 60%,

On the other hand, Tencent may implement a two-way blockade upstream and downstream-upstream restrictions on the promotion channels of online game operators, and downstream use of online game copyright advantages to suppress other live broadcast platforms.

A senior practitioner in the game industry told Entertainment Capital that the two game live broadcast platforms will inevitably consume each other in order to compete. For Tencent, in business, promotion of mergers will definitely help improve efficiency, “but everything has A matter of degree, if the industry is over-concentrated, it will not be a good thing for supervision or the ecological prosperity of the industry.”

“The core competitiveness of game live broadcast is copyright, followed by the head KOL. The competitive live broadcast is very different from the pan-entertainment live broadcast. The competitive live broadcast head KOL is of great value. The core competitiveness of Douyu and Huya, The first is Tencent’s game copyright, and the second is the TOP-level anchor.” An analyst in the live broadcast industry said: “The termination of the merger is definitely a good thing for the entire industry.”

“The most direct thing is that if the two merge, the income of game anchors and the employment opportunities of practitioners will inevitably be affected.” But he also said that the game live broadcast industry is not the focus of industry competition now, and it has already been the most profitable. when.

In fact, the merger prohibition of Huya Douyu is the third time that my country’s anti-monopoly law enforcement agency has officially announced the “concentration of operators” case following the case of Coca-Cola’s acquisition of Huiyuan in 2009 and the establishment of a joint venture by Maersk Mediterranean CMA CGM in 2014. Announcement is prohibited. But in the Internet field, this is the first time.

“The results of the centralized review of business operators usually include three forms, namely, unconditional approval, conditional approval and prohibition. Among them, prohibition can be said to be the most intense type of review result.” Du Guangpu, a lawyer at Jingshi Law Firm, told the media: “Up to At present, my country’s anti-monopoly law enforcement agencies have reviewed about 3,800 cases of concentration of undertakings, most of which have been approved unconditionally, and 50 cases have been approved conditionally.”

Different from Alibaba’s “choice of two” unfair competition afterwards, this time the veto of the merger in the form of an administrative injunction has a clear “pre-regulatory” color, which avoids the expansion of subsequent risks.

“Google has abused its dominant market position, and the European Union has imposed three penalties totaling more than 8.2 billion euros.” Zhang Chenying, director of the Competition Law Research Center of Tsinghua University Law School and member of the Expert Advisory Group of the State Council’s Anti-Monopoly Committee, wrote: Look, the current anti-monopoly enforcement mechanism for large platforms focuses on ex-post supervision.”

But in his view, anti-monopoly should be “full-chain supervision”-through pre-supervision to prevent the emergence of monopoly; through post-supervision, platforms are forbidden to implement monopoly through monopoly agreements and abuse of market dominance. Looking back today, Facebook acquired the start-up platform Instagram in 2012 and the mobile instant messaging app WhatsApp in 2014. This “stifling acquisition” blocked effective competition in the market, thereby inhibiting innovation and ultimately harming consumer welfare.

“Huya and Douyu can still operate independently.” Zhang Chenying said: “The prohibitive administrative decision only indicates that it does not support the rapid expansion of enterprises through centralized methods, but does not mean a negative evaluation of the parties’ existing business models and operating conditions. .”


Douyu Huya returns to the PK field and will become the OPPO and VIVO of the game live broadcast industry?

“Actually, Douyu and Huya have never been harmonious, and they are secretly competing with each other.” A person close to the two platforms revealed. In recent years, both parties have continued to litigate related to anchor liquidated damages and domain names.

Just in March of this year, Huya was sued by Huya anchor Jiang Haitao (His) for “digging corners”, and Huya was eventually enforced. The court deducted 49.7 million yuan from Douyu’s account.

Today, Douyu and Huya have formed a certain degree of competition and cooperation.

In May of this year, Huya signed an LPL copyright broadcasting agreement with Tengjing Sports at a price of 310 million US dollars (equivalent to 2.013 billion yuan). However, according to industry sources on Entertainment Capital, the acquisition of the LPL copyright this time was actually a joint purchase between Douyu and Huya, but it was announced in the form of distribution to the outside world.

In the future, the competition and cooperation between Huya and Douyu may continue for quite some time. Just like the relationship between VIVO and OPPO-the two parties operate independently. Both parties have cooperation in technology and procurement, as well as competition in traffic and attention, in order to achieve a balanced situation.

The story of Tencent and Huya Douyu began in 2018.

In 2018, Tencent’s internal gaming sector was the interactive entertainment business group (IEG). In 2018, Tencent’s organizational structure was adjusted and PCG (Platform and Content Business Group) was established. So far, IEG has only left Tencent Games and Tencent E-sports.

At the same time this change occurred, IEG invested in Huya as the main strategy, holding up to 50.1% of the controlling share. It is worth recalling that the two things were announced on the same day.

According to “LatePost” report, in March 2019, Tencent’s Interactive Entertainment Group (IEG) established a new department-the game live broadcast business department, which means that Huya began to intend to coordinate Huya, Douyu, and Penguin e-sports. The relationship between them to avoid serious internal friction.

In April 2020, Tencent increased its holdings in Huya and became Huya’s largest shareholder. As early as March 2018, Tencent had increased its holdings of Douyu by US$630 million, which also made Tencent the largest shareholder after Douyu’s listing in 2019. Currently, Tencent has sole control over Huya and joint control over Douyu.

On October 12, 2020, Douyu and Huya announced that they had formally accepted the merger invitation from major shareholder Tencent for a strategic merger.

According to the announcement, Douyu will delist from Nasdaq and become a wholly-owned subsidiary of Huya. The new company will adopt a joint CEO system. Chen Shaojie will join the board of directors of the new company after the merger. According to the share swap ratio, Douyu’s existing shareholders and The existing shareholders of Huya will each hold a 50% economic interest in the combined company.

Tencent will transfer the Penguin e-sports business to Douyu for US$500 million. Tencent has become the largest shareholder of the combined company by acquiring shares of all parties, and will have 67.5% of the voting rights.

The influx of new players, the game live broadcast industry has an undecided end

An industry insider introduced to Entertainment Capital, that game live broadcasts can be roughly divided into three stages. The first stage is the budding period, when the tiger tooth fighting fish has just been born, and the industry has a huge room for imagination; the second stage is the chaotic period, when “new forces” such as pandas, dragon balls, the whole people, and tentacles rise rapidly, digging anchors at high prices for each other, and the competition is cruel. Compared with the meat grinder, some platforms have also fallen behind at this time.

The third stage is the maturity stage. The competition level of the product has ended. The contests of major platforms have turned to the operational level. New and broken circles have become the key words, and the salary of the anchor has returned to a more reasonable price.

Today, it is almost impossible for start-up platforms to break through on the Internet game live broadcast track.

An investor who pays attention to game live broadcasts is outspoken. “From around 2010 to today, for more than 10 years, all companies with more than US$3 billion, primary market, secondary market, and Internet platform-level companies were all pulled out, and about one-third of them were spun off from large companies. As soon as the big players follow up, there is nothing fun for the small players. Maybe 1/3 are removed from the big company, and the remaining 2/3 may have been held by the big company before the A round.”

The other side of the coin is that the continuous influx of new players such as Douyin, Kuaishou, and B stations in recent years has brought new vitality to game live broadcasts. Although they are not live broadcast platforms in the traditional sense, they are based on a huge user base. The impact on the entire game live broadcast market is equally significant.

The current DAU of Douyin has 600 million, while the short video MAU of fast hand games has exceeded 300 million. In 2020, the number of MAUs watching live games will exceed 220 million. Calculated, this number is 80 million more than the sum of Huya Douyu mobile terminal monthly life.

Source: 2020 Kuaishou Content Ecological Semi-annual Report

Some people also have a negative attitude towards Douyin Kuaishou’s game live broadcast. “The threshold for Douyin game live broadcasts is high, and short videos are needed. In other words, people can watch the live broadcast only when the account is popular. This is completely different from the logic of Huya Douyu’s display interface.” The founder of MCN Agency Potato Chips Technology explained.

Station B has become the “third position” that anchors tend to choose. In recent years, Station B has continued to move. First, it signed a contract with the famous Betta anchor Feng Timo at a high price, and then won the LOL China Mainland region for three consecutive years from 2020 to 2022. Exclusive live broadcast rights for global events. Including a series of live broadcast copyrights and on-demand event content such as the global finals and mid-season championships, the competitiveness of its game live broadcasts has become increasingly prominent.

In addition to external players, WeChat video accounts are also actively deploying game live broadcasts. For new anchors, the traffic of video accounts has a considerable tilt. According to industry sources, many mid-waist game anchors have chosen video accounts as their live broadcast platform.

Although the exploration of video accounts is still in the embryonic stage, the underlying logic is roughly the same as the jitter, that is, the huge traffic pool of WeChat is used to divert the video accounts to build a live broadcast ecosystem and increase user stickiness.

In recent years, the creators of Ruyuan God, Love and Producers have been out of the circle, and the Miha Tour and Folding Paper Tracks focusing on “small categories” have made a lot of money behind them. According to the late report, “Yuan Shen” not only achieved the second largest revenue in the world, but it also completely bypassed Tencent’s game marketing and distribution system. Mihayou spends 90% of the domestic marketing expenses on station B and ByteDance’s Toutiao, Douyin, and Watermelon. Players can’t even download it from Tencent’s App Store.

This also makes Tencent begin to reflect on why it is difficult to reproduce national-level games, and it has repeatedly missed potential investment targets.

Even if there is no traffic recommendation on the platform, games similar to Yuanshen can also be “loved by thousands” in Douyu. Based on the live broadcast content, the anchors have also derived a large number of game videos. After observation, Xiaoyu found that Douyuyuan The highest viewing volume of God-related videos reached 654,000. By attracting users with live broadcasts and forming user stickiness with videos, Douyu’s “Yuanshen” section has formed a relatively open ecology.

For independent live broadcast platforms like Huya Douyu, the primary consideration is how to cover more diverse groups of people and attract more loyal traffic in the short video era. As Chen Rui said, the top priority at station B is to “break the circle.” Otherwise, just stick to the user foundation of the old era without a large influx of new users, and then there will be no grand strategy to talk about.

Author: Before the banquet
Source: Entertainment Capital
Address: https://mp.weixin.qq.com/s/CfBeIR_LkNi1iwHOT9d_ZA

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