Recently, the game live streaming industry has experienced one round of shock after another. The arrest of Douyu’s CEO has led to a continuous decline in its stock price. Former Douyu anchor Xuxu Baobao has shut down his microphone. Huya’s top anchor Zhang Daxian has left to join Douyin... This year, the revenue and net profit of the two leading game live broadcast companies Douyu and Huya have continued to double. The growth rate of the game live broadcast industry has slowed down significantly. How can they open up a new growth curve? How to save yourself from fire and water?
CEO arrested, stock price plummets
When it comes to game live streaming, we have to mention the "serial drama" of the arrest of Douyu CEO Chen Shaojie.
According to Douyuduo’s announcement, Chen Shaojie was arrested by Chengdu police around November 16. At noon on November 22, the Dujiangyan Public Security Bureau in Chengdu issued a notice stating that after investigation, it was found that Chen Moujie (male, 39 years old) was suspected of opening a casino. Currently, Chen Moujie has been arrested in accordance with the law.
Douyu itself is not unaware of the seriousness of the problem. In its announcement, it admitted that Chen Shaojie’s continued detention and any subsequent related legal proceedings and enforcement actions against relevant parties may have a significant adverse impact on the company’s reputation, business and operating results.
"The company maintains normal operations of its business and remains committed to maintaining regulatory compliance on its platform. The board of directors and management will oversee the company's operations and develop contingency plans to respond to Chen Shaojie's arrest and related investigations." Douyu said in the announcement.
Its contingency plan was also announced on the evening of November 27. Douyu’s company board of directors established an interim management committee on November 24, composed of company director and chief strategy officer Su Mingming, company director and vice president Cao Hao, and company vice president Ren Simin. An interim management committee will manage the company's operations until further notice.
With the establishment of an interim management committee this time, Douyu pointed out in the announcement that the board of directors believes that under the leadership of the interim management committee, the company will continue to maintain normal operations.
There is no doubt that this incident caused a sharp shock to Douyu’s stock price. Douyu has fallen nearly 15% in the past five trading days. Today, Douyu's total market value is only US$260 million, a 90% drop from its valuation of US$3.7 billion when it went public. And its current stock price is hovering around US$0.8 on the US stock market, hitting a record low. Compared with the highest price of US$20.54 at the beginning of 2021, it has also reached "ankle-breaking". Moreover, Douyu’s stock price has fallen by nearly 6% since the beginning of the month, and has fallen by more than 40% since the beginning of the year.
The anchor has a "record" of gambling and has now stopped broadcasting collectively
Also causing a chain shock reaction are Douyu’s top anchors. Now, Doinb, My Neighbor Totoro, I Am Dakunkun, etc. have collectively stopped broadcasting. In addition, Baby Xuxu, who "left" Douyu to join Douyin in August this year, has not broadcast live since November 18 this year.
The Tianyancha App shows that the five companies associated with Xuxu Baobao (Ren Yixu) have all been cancelled. Among them, Shanghai Xuxu Baby Culture Media Studio and Qingdao Wuying Cultural Service Studio are sole proprietorships; Qingdao Huanggu Culture Media Co., Ltd. is 99% owned by Qingdao Wuying Cultural Service Studio, and Ren Yixu serves as the legal representative, executive director and general manager of the company; Guangrao County Xuxu Baby Media Studio and Zhong County Ren Yi Business Information Consulting Service Department are individual industrial and commercial households, with Ren Yixu as the operator.
At present, although there is no news proving that the "wave of suspensions in Douyu" is directly related to Chen Shaojie's arrest, Douyu anchors have previously been involved in casinos.
Previously, the first brother of Douyu Outdoor, "彡彡九场", was also arrested by Dujiangyan police for allegedly opening a casino. According to the court hearing, from March 2017 to September 2020, the anchors involved in the case, Fu Moumou and Pan Moumou (members of the "彡彡九Outdoor" group), used the lottery module of the "Fans Welfare Club" on the Douyu platform to set the prize amount and number of lottery prizes in advance, and organized "water friends" to conduct the lottery.
During the live broadcast, the anchor involved in the case kept promoting "getting a card and taking home 50,000 yuan" and "trying to turn a bicycle into a motorcycle" to encourage fans to apply for a card and draw a lottery. During the event, viewers spend money to buy props, gifts, and open cards to participate in draws, and the host privately distributes the bonuses to the viewers, which is actually gambling in disguise.
According to reports, by the time "彡彡九Outdoor" was captured, the live broadcast room had organized more than 4,200 lottery draws, with more than 4.42 million people participating, and ultimately "attracted" nearly 120 million yuan.
In addition, compliance issues such as pornography and vulgarity have long plagued Douyu’s live streaming rooms. Many users have previously complained that Douyu pushes soft porn-related content, and such anchors will also suggest that viewers can enter the VIP group by giving gifts. Later, Douyu was officially named, interviewed, and rectified and supervised intensively.
The financial report also shows that Douyu’s development this year is unfavorable. Douyu's revenue in the three years from 2020 to 2022 was 9.6 billion yuan, 9.1 billion yuan, and 7.1 billion yuan respectively, which is on a downward trajectory. Net profit has fallen sharply, reaching 540 million yuan, -620 million yuan and -90.4 million yuan respectively in the three years.
The latest financial report data shows that Douyu’s second-quarter revenue was 1.3922 billion yuan, down 24.1% year-on-year; net profit was 6.8 million yuan, and its net loss in the same period in 2022 was -38.8 million yuan.
In the second quarter of 2023, the number of monthly active users of Douyu was 50.3 million, a decrease of 5 million from the same period last year; Douyu's core paying users in the second quarter of 2023 were 4 million, which was in a state of "steady regression" compared with 7.3 million and 6 million in the previous two years.
Huya’s head anchor switches to Douyin
Douyu is in dire straits, and the other live-streaming company Huya is also having a hard time. It has been more than a hundred days since Huya’s head anchor Zhang Daxian left. Zhang Daxian has 29.4 million fans on Huya. In August this year, he started live broadcast on Huya for the last time and has been on hold since then.
Subsequently, rumors have spread that Zhang Daxian and Huya have not agreed on a new contract extension, and the most widespread one is that Zhang Daxian will choose to join the Douyin platform.
Recently, Douyin officially announced that Zhang Daxian will join Douyin Live and make his debut on December 2. According to online reports, Zhang Daxian’s signing fee is 180 million.
From a financial reporting perspective, Huya's life has been no longer easy since 2023. In the first and second quarters of 2023, Huya's total revenue fell by 20.91% and 19.94% year-on-year respectively.
Recently, Huya released its third quarter financial report for 2023. The financial report shows that Huya’s total revenue was 1.648 billion yuan, a year-on-year decrease of 30.73%; the net profit attributable to the parent company was 12.1 million yuan, a decrease of 79.97% from 60.4 million yuan in the same period in 2022.
The anchors of the two leading companies have left one after another and their financial reports have declined, which is not unrelated to the general environment. According to reports from Gamma Data and iResearch, the growth of the game live streaming industry is slowing down. In 2017, the fastest growing year in the industry, game live streaming achieved a growth of 188.5%. From 2020 to 2022, this number became 32.6%, 26.7% and 21.8%, and the market size growth rate began to slow down.
This proves that it is difficult for Huya to return to its peak state by relying solely on its live broadcast business. What is even more fatal is that Huya has not been able to develop a second growth curve.
Nowadays, Douyu is deeply involved in the arrest of its CEO. It is leaderless and its stock price has plummeted. Huya is facing the departure of top anchors one after another and a double decline in revenue and net profit. It is still unclear whether the game live broadcast industry will usher in a major reshuffle. How the two leading companies can continue to maintain their market position and solve the current dilemma is also a difficult problem that they must consider.
Text | Sina Finance Yuan Yiming