On the evening of November 21, Douyu (NSDAQ: DOYU) announced the reason why CEO Chen Shaojie lost contact. The announcement stated that Chen Shaojie was arrested by Chengdu police around November 16. Douyu said it has not received any formal notification of an investigation into Chen Shaojie or the reasons for Chen Shaojie’s apparent arrest. Chen Shaojie's continued detention, and any subsequent related legal proceedings and enforcement actions against relevant parties, may have a material adverse effect on Douyu's reputation, business and results of operations.
As of press time, Douyu’s share price fell 7.48% before the market opened, to US$0.89 per share.
Earlier in early November, Chen Shaojie, chairman and CEO of Douyu, was reported to have lost contact for nearly three weeks. At that time, some people in the game live streaming industry speculated that Chen Shaojie’s loss of contact might be related to gambling.
Public information shows that in January 2021, the live broadcast room of Douyu anchor "Changsha Rural Death Squadron" was reported by many media to be suspected of gambling. According to statistics from a third-party live broadcast data platform, the revenue of "Changsha Rural Death Squadron" in 2020 was as high as 177 million yuan, with a single-day turnover of 13.1767 million yuan. It was called "Douyu's largest casino" by netizens.
Douyu, known as one of the "Game Live Twins" along with Huya, successfully landed on Nasdaq on July 17, 2019. It was the first local Internet company in Hubei to be listed overseas, and it was also China's largest online game live broadcast platform. However, Huya and Douyu were subsequently controlled by Tencent.
In 2020, Tencent tried to promote the merger of Huya and Douyu, but at that time, the two had more than 40% and 30% of the game live broadcast market share respectively, ranking first and second, with a total of more than 70%. Due to the involvement of anti-monopoly laws and other regulations, they were stopped by supervision.
In recent years, domestic game industry data has been under pressure. The "China Game Industry Report from January to June 2023" shows that the actual sales revenue of the Chinese game market in the first half of the year was 144.263 billion yuan, a decrease of 2.39% from the same period in 2022.
The latest financial report for the second quarter of 2023 shows that Douyu’s current revenue was 1.392 billion yuan, a year-on-year decrease of approximately 24%. It has experienced year-on-year revenue declines for many quarters. A few days ago, Huya announced its third quarter financial report for 2023. Total revenue during the period was 1.65 billion yuan, a decrease of approximately 31% from 2.379 billion yuan in the same period last year. Revenue also fell for many quarters.
In August this year, Huya announced a strategic transformation. To this end, Huya has formulated a "three-year plan" with the main goal of promoting changes in its commercialization roadmap by providing more game-related services. In contrast, Douyu’s strategy is relatively stable. At this year's second quarter results conference call, Chen Shaojie said that Douyu's top priority is to focus on long-term sustainable development, stabilize the fundamentals of traditional businesses, optimize operational effects, and improve operational efficiency.