Much like we have Twitch, the Chinese have their own brand of a live streaming video games platform that holds the majority of their market. That brand comes in the form of a company know as HUYA Inc. The company made released a statement today which said that its board of directors was met with a non-binding proposal letter from another major Chinese conglomerate known as Tencent Holdings Limited.
The letter basically called for a stock-for-stock merger to take place between HUYA and DouYU International Holdings Limited. By doing so, HUYA would be able to take over DouYu by acquiring all of its ordinary shares, even the ones that are represented as American Depository Shares. HUYA could then classify these shares as Class A ordinary shares of their own and release them back into the market. This would be known as the “Transaction.”
Tencent has vouched to fully back the Transaction since they have a vested interest in both HUYA and DouYu as a shareholder. Since the letter was made public, Tencent has gone into a share transfer agreement with JOYY Inc. and a completely autonomous share transfer agreement with Mr. Rongjie Dong, the CEO of HUYA.
Tencent is set to buy 30,000,000 class B shares from JOYY Inc. and 1,000,000 class B shares from HUYA. These transfers are set to be completed by the 9th of September this year only.
The autonomous and non-supportive board members have been appointed to judge and evaluate this move so as to ensure the decision is gone over fairly and responsibly. The Board of HUYA has also issued a statement warning stakeholders considering investing in any securities being floated by Tencent since the non-binding proposal letter sent by Tencent is yet to be replied to.
What is interesting to see here is the dynamic of power in the industry. For the longest time, Twitch has held an unchallenged monopoly in the live video-game streaming sector. But now a new titan is rising from amongst the mist.
Tencent’s plan is as obvious as daylight. Merge the two biggest online live video-game streaming services in China and take over them. After that, they’ll release a consolidated live-streaming platform to combat the monopoly and challenge the authority of Twitch.
This move is none other than a rising piece in the US-China rivalry for online dominance. For the longest time, the US has held the mantle and now the Chinese are knocking on the doors. Furthermore, Tencent has set itself up wisely by buying out both HUYA and DouYu since the two are cut-throat competitors of each other.
By consolidating a hold on both of them by buying out the majority of their shares, Tencent can put an end to the blood-lusted competition and combine them to prong an attack towards a common enemy, Twitch.
The money that Tencent is saving on cut-throat competition and brand cannibalism is being planned to be used for hiring streamers and influencers to bring about the virality aspect to their new brand. Moreover, the take-over also gives Tencent a chance to take the lead from a strong competitor of its, ByteDance.
ByteDance is the company behind TikTok and is currently expanding rather heavily into the gaming industry as well. What Tencent has just done has allowed it to create a foothold in the industry before its competitor could even move in.
The fact of the matter is that the Chinese are readying themselves to fully take-over the online space and their recent target just so seems to be the online gaming space.
Will Twitch be able to hold its monopoly or will Tencent rise as the new leader of the market? Let us know down in the comments below!