Although it is not the first time that the merger has been rumored and this rumor has not been confirmed, the capital market has reacted. On the day of the news exposure, Huya shares rose 7.77%, douyu shares rose 6.02%, Tencent shares also rose.
Spare no effort to catch up with the Kwai live broadcasting of B station, fast hand and other platform layout. If the merger is successful, it will be regarded as a powerful move to stop the loss of internal friction of the two largest competitors.
Prior to that, the sky high price hunting anchor between Betta and tiger tooth continued, and the contract dispute between the anchor and the platform gradually escalated to the lawsuit of unfair competition between the platforms. If the merger is realized, the head anchor of the two may decline in bargaining and the anchor bonus period will disappear.
Under the current situation of stricter supervision of live broadcast platform, industry insiders believe that the combination of platforms or sharing of management scale and blacklist and other policies is conducive to the ecological governance of live broadcast content.
On the other hand, since the anti monopoly law came into effect 12 years ago, there has been no domestic large-scale Internet enterprise mergers and acquisitions reported in advance for examination and approval, nor have they been punished for the implementation of equity mergers and acquisitions in accordance with the law.
In recent years, the market scale of Chinas game live broadcasting industry has grown rapidly. Judging from the number of active users, tiger teeth and Betta are far ahead of other platforms and firmly occupy the leading position.
According to Zhu Junchao, founder of nuocheng game method, the domestic game live broadcasting industry has mainly formed a 2 + 1 situation, 2 refers to Betta and tiger teeth, two platforms occupy a large part of the game live broadcasting industry, and 1 refers to station B.
In the game of live broadcast, Kwai Chai also got a piece of the game. Kwai Kwai released the 2019 Kwai live broadcast ecological report in December 2019, showing that the live broadcast of DAU was 100 million and the live broadcast of live games was over 51 million.
According to the information of Kwai Kwai, the gift income of fighting fish, tiger tooth, B station and fast hand in March 2020 was 974 million yuan, 818 million yuan, 1 billion 5 million yuan and 1 billion 749 million yuan respectively. In April 2020, the gift income of fighting fish, tiger tooth, B station and fast hand were 719 million yuan, 803 million yuan, 892 million yuan and 1 billion 905 million yuan respectively.
Therefore, the rumor that Tencent promotes the merger of the two is also interpreted by the outside world as tiger teeth and Betta have to merge..
For both sides of the platform, in recent years, the main problem lies in the business model - the profitability is still weak, and the income structure is relatively single.
The financial reports of the two platforms in the first quarter of 2020 show that they are still highly dependent on the live broadcast income. The live broadcast income of Huya in the current quarter is 2.27 billion yuan, accounting for 94% of the total revenue. The direct broadcast income of Betta in that season was 2.113 billion yuan, accounting for 93% of the total revenue.
Its very expensive to sign up for the anchor, buy the copyright of the competition and hold the competition every day. If the two companies are merged, the traffic competition between the anchors will be eliminated and the competition copyright will be shared. The most important thing is to rely on Tencent capital, and both Betta and tiger teeth will be much easier. Zhu Junchao said that in the face of the pressure of the rising star of station B, the merger of the two is very reasonable under the match of Tencent.
Tiktok, Kwai, and other platforms are rising with the B market, and the market segmentation also threatens the growth of users and the growth of users.
The user overlap rate of the two platforms is very high, and business convergence. Tencent is Huyas largest shareholder and has a third stake in Betta. Li Songlin, an analyst of AI media consulting industry, believes that in this environment, the competition between the two sides produces huge consumption, but there is no winner with huge advantages. Instead, it is more conducive to the stability of the position and can work together to compete with other platforms.
The high weight of live broadcast revenue means that the key to capture traffic is the anchor. In recent years, the dispute between tiger teeth and Betta has been on the rise, with sky high liquidated damages.
The competition for interests has gradually escalated, and the anchors job hopping behavior has evolved from the contract dispute between the individual and the platform to the unfair competition between the platforms.
In the case of infringement of copyright and unfair competition between Betta and national TV and anchor Zhu in 2017, the court ruled that all China TV constituted unfair competition on the ground that it knew and used the well-known anchor resources cultivated by others and signed exclusive contracts. Since then, there have been many lawsuits involving unfair competition between platforms. In 2019, panda live TV sued Betta for job hopping, and tentacle live also sued Huya to the court for unfair competition.
In the case of Betta v. national TV, the Court pointed out that the competition in the live broadcasting industry is actually the competition of the platform anchor resources. Using others to sign up for anchors is essentially to directly grab other peoples competitive achievements and damage the competition order in the industry.
High price hunting and digging has become a huge resource consumption for the platform and industry. If Tencent merges tiger tooth and Betta, will the anchors skyrocketing job hopping no longer exist?
Once tiger teeth and Betta are merged, the competition pattern of anchor may have great changes, and the competition in the industry will be more intense. Li Songlin believes that for the phenomenon of sky high price anchor digging, to some extent, but after the combination of the two, digging the head anchor produced by other platforms has more advantages.
Zhu Junchao said that once the merger, the traffic of the two companies will become one, and the competition between the anchor resources will be lost. The weakening of competition between the two platforms means that the head anchors bargaining power on the platform will be weakened, and there will certainly be fewer cases of job hopping at sky high prices.
The audience of the live broadcast platform is different, so it is difficult to determine whether the anchor is suitable for the job hopping. Sun Lei cites Feng Timo, the first sister of Betta, who signed the contract for station B at the end of 2019, as an example. The value of the anchor has increased several times compared with that before. However, there is a big difference between the portraits of fans in station B and that in station B. The number of fans of fengtimo has dropped from more than 20 million in Betta to 2.55 million in station B.
Sun Lei is not optimistic about the impact on the anchor after the merger. If there is no internal agreement in black and white that forbids skyrocketing people, there will still be fierce friction between the two as direct competitors.
With the development of the live game industry, with the regulatory level of compliance requirements, constantly shuffle.
Although the live broadcast platform has been rectified for many times in recent years, the chaos such as vulgar content is still repeated, which may be related to the balance between the regulatory scale and traffic benefits of the platform.
From the platform conventions of Huya, douyu and Penguin e-sports, the relevant constraints of penguin E-sports are more comprehensive in terms of anchor management.
For example, tiger teeth and fighting fish both regulate the anchors dress and movement. In addition to listing specific dress forbidden areas, Penguin video games also requires that clothing should not lead to obvious lower body contour and vulgar picture. It also puts forward clear restrictions on the number of body movements of the anchor, and explicitly forbids ASMR content.
In the game live broadcasting industry, there is no communication between platforms for the anchor information. There has been a misdemeanor that has been banned by a certain platform, and the anchor has re registered for broadcasting on another platform.
Although the live broadcasting industry association regularly publishes blacklists, there is still a certain delay. The above-mentioned people believe that after the platform merger, it may be possible to get through such blocking information horizontally, and the restriction on the anchor himself will also be strengthened.
If Huya and douyu merge, they will have more advantages in establishing a complete high-quality content output platform. Only in terms of content to ensure that their own platform content has a strong competitiveness, in order to be able to stay at the top of the industry. Li Songlin is optimistic that the merger will promote the quality of game industry content.
In line with the antitrust review standards
The merger of enterprises after reaching a certain scale may lead to the exclusion and restriction of competition. Enterprises must report to the anti-monopoly law enforcement agency for examination, and then determine whether merger needs to be prohibited. If not, concentration shall not be implemented.
Does Tencent need to apply for antitrust review for the merger of douyu and Huya?
One of the State Councils declaration standards for concentration of business operators is that the total global turnover of all operators participating in the concentration exceeded 10 billion yuan in the previous year, and the turnover of at least two operators in China exceeded 400 million yuan. If it meets the requirements, it is necessary to declare in advance.
According to the Huya financial report, the total revenue in 2019 is 8.375 billion yuan, and the total revenue of Betta in 2019 is 7.28 billion yuan. At present, Tencent holds 36.9% of Huyas shares, making it the largest shareholder and more than a third of douyus shares.
It is understood that the anti monopoly law will abuse the dominant position of the enterprise as monopoly, the specific definition of the dominant enterprise is: the market share of a single enterprise is more than half, or the total market share of two enterprises is more than two thirds, and so on.
If we want to define the merger as monopoly, we need to clarify whether the merger will occupy the dominant position in the market.
How to judge the market share of the game market? Luo Pinliang, a professor at Fudan Universitys School of management, analyzed to the 21st century economic reporter that, based on the number of users, the data of China business intelligence network showed that tiger teeth accounted for 45.90% and Betta accounted for 36.50%; if calculated by business income, according to iResearch consulting data, the revenue of Chinas game live broadcasting industry in 2019 reached 20.81 billion yuan, and the market shares of tiger teeth and fighting fish were 40.25% and 35.00% respectively.
It can be seen that no matter in terms of the number of users or in terms of operating income, individual enterprises of tiger tooth and Betta are not enough to form a dominant market position. If we look at the total market share, it is likely to form a dominant market position.
But judging the market share from the actual situation, Luo Pinliang believes that there are still many uncertain factors.
For example, there is user overlap in each platform, and the actual number of users will be reduced after merging. At the same time, the calculation of the share of the number of users only considers the users of the game players, ignoring other users of the live game platform. With the Kwai Fu, B station, shaking and other platforms to expand the tiktok business, the market may reshuffle and market share will change accordingly.
What is the related market of live game? There is no clear definition.
It is complex to define the market by platform or product or business on the platform, which is also an important challenge in the anti-monopoly practice of the Internet market. Luo Pinliang said that the current mainstream business model of the game live platform is content live + production + advertising + virtual props, which takes the game live broadcast as the basic business, and provides diversified value-added services such as entertainment, variety show, education, outdoor and sports. In terms of game live broadcast, tiger tooth and Betta have high market power; while in terms of content production, advertising, virtual props and non game live broadcast, tiger teeth and fighting fish have more competitors and do not have market power.
According to Luo Pinliang, the anti-monopoly investigation on merger is generally to analyze the damage to the market competition pattern after the merger, that is, the anti competition damage investigation. In the world, it is mainly based on the change of HHI (the sum of the squares of market shares of all enterprises) before and after the merger to judge whether the merger destroys the competition.
The high market share is not the only reason to ban M & A. Whether it is suspected of monopoly depends mainly on whether there is effective competition. Liu Xu said that Tencent currently controls a large number of game resources in the upstream of the market, which has a very strong appeal to users, and the downstream has actively participated in game live broadcasting enterprises. In the case of CO investors, the intensity and motivation of competition among game live broadcast enterprises will be affected.
Liu Xu believes that for the game live broadcasting industry, if the merger and acquisition is realized, the biggest impact is that Tencent will increase its market share in the upstream by covering the downstream of the market, that is, establishing a controlling position in the field of live game broadcasting.
For example, if non Tencent games are broadcast live on tiger teeth and Betta, there may be cost increases, less diversion and publicity. At the same time, after users use a live broadcast platform for a long time to establish brand loyalty, the user stickiness of the platform will also be enhanced. At present, in addition to investing in tiger teeth and Betta, and self operated Penguin e-sports, Tencent is also the second largest shareholder of station B. when Tencent has single or joint control over all four platforms, other game companies in the upstream of the market may find that there is no suitable alternative in the downstream live game market.
Tencents increased game market share may lead to a decline in the share of other enterprises in Chinas game market. Liu Xu said that Guangdongs game industry accounted for more than three-quarters of the countrys tax revenue in 2019, among which Tencent contributed a lot. In the long run, it may affect the tax revenue of other provinces and the implementation and employment of relevant industrial policies in other provinces that support the development of the game industry.
According to Luo Pinliangs analysis, the leading enterprises in the upstream of the industrial chain can promote the merger of the downstream enterprises, which can coordinate the channel conflict to a certain extent, and will also reconstruct the game live industry chain and affect the interest balance of the industrial chain.
Monopoly power does not mean monopoly behavior. In the Internet industry, under the influence of the law of platform economy, enterprises with monopoly power have become commonplace. Whether it is suspected of monopoly, we need to pay attention to the specific enterprise behavior. According to Luo Pinliangs practical experience in antitrust, the most common monopolistic behaviors include monopoly or collusion in pricing, price discrimination, one out of two or vertical exclusion.
Even though the case of Didis acquisition of Uber China, which was made public on August 1, 2016, has been investigated by the former Anti Monopoly Bureau of the Ministry of Commerce and the current antimonopoly Bureau of the State Administration of market supervision and administration, the conclusion of the investigation has not been released so far, and didi has not stopped the business integration of Uber China.
As the current large-scale mergers and acquisitions of Internet enterprises have not been subject to anti-monopoly review, it remains to be explored from what angles this review needs to start. Liu Xu said that if the merger and acquisition of the Internet industry can be declared in accordance with the anti monopoly law and its supporting rules, after soliciting feedback from upstream and downstream enterprises and competitors in the same industry, and by adding restrictive conditions, the negative impact of M & A on market competition can be minimized, which is the guarantee for the sound development of various industries.
(author: Zhang Yating, editor: Cao Jinliang)
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