Battle fish tiger teeth big merger dust settled? Monopoly review and business collaboration are barriers

category:Finance
 Battle fish tiger teeth big merger dust settled? Monopoly review and business collaboration are barriers


This is the bettas six consecutive quarters of profits, but also the most rapid quarter of net profit after turning losses into profits. Its revenue and net profit hit a new high again.

In the evening of the same day, Betta announced that it had received a preliminary non binding proposal from Tencent to merge Betta and tiger teeth. It is suggested that douyu and Huya should be merged in the form of share exchange. Tiger tooth or its subsidiaries will acquire all the tradable ordinary shares (including the common shares represented by American Depository shares) of douyu through the share exchange transaction, and the shareholders of douyu will obtain the agreed number of newly issued class a ordinary shares of Huya in exchange for their respective douyu shares.

In addition, Betta is exploring with Tencent various new tasks and plans that may be implemented in the future, such as the permanent live game entrance, etc. If these can be implemented universally, I think it can promote the number of mobile terminals and further increase the market penetration. Chen Shaojie said.

On the morning of August 11, Dong Rongjie, CEO of Huya, issued an open letter to the company, saying that the companys board of directors had not yet made any decision and would carefully review and evaluate the proposal and make the best choice for the company, shareholders and colleagues.

Higher than expected growth

This is driven by multiple factors, such as the number of users paying for Betta, the growth of arppu (average revenue per paying user), and the promotion of brand influence. According to the financial report, in the second quarter, Betta increased investment in optimizing the efficiency of anchor operation and management, improving the commercialization efficiency of the platform, and improving the diversified content ecology such as E-sports and entertainment.

Specifically, in terms of revenue composition, more than 90% of the revenue came from live broadcasting, which increased by 35.8% from 1.708 billion yuan in the same period of 2019 to 2.320 billion yuan. Advertising and other revenue increased by 14.5% from 164 million yuan in the same period of 2019 to 188 million yuan.

As for the main driving factors of the growth of live broadcast revenue, Cao Hao, vice president of Betta, introduced that the realization efficiency of each division has been improved through the refined operation of divisions, especially the liquidity of some districts has been continuously enhanced in this quarter. For example, the platform strengthened the diversified construction of live content, improved the cashing efficiency and revenue contribution of non game zones; continued to increase the cashing efficiency of middle and low-end anchor; daily activities on a weekly basis, combined with large-scale marketing activities in the second quarter, also promoted the improvement of revenue.

The total number of users paid for Mahu in the first quarter increased to RMB 30.54 million, up to RMB 15.54 million in the same quarter; the total number of users in the mobile end continued to increase to RMB 15.54 million compared with the same period of the same period last year; the total number of users who paid for the game of fish continued to increase to RMB 15.54 million, up to RMB 15.54 million.

Douyu official said that the growth of its users is also related to the action of Betta to deeply cultivate the e-sports industry chain. In terms of game content, Betta continues to sign high-quality game anchors in the industry, covering the top events in the industry. According to the data, in the second quarter, there were 203 live broadcasting of Kings glory KPL professional league matches in the second quarter, an increase of 712% compared with the first quarter, and the number of viewers reached 240 million. During the reporting period, Betta signed with the top E-sports teams such as tes, OMG, T1 and Seoul Dynasty.

It is worth mentioning that the sales and marketing expenses of Betta in this quarter were 142.1 million yuan, which decreased by 15.3% year-on-year, but increased month on month. Chen Shaojie explained that the selling expenses of Betta mainly include some labor costs of personnel, as well as other promotion, online and offline activities, as well as some brand publicity such as sponsorship of E-sports teams.

In the second quarter, due to the gradual recovery of the event, the betta increased the investment in the publicity of the event, as well as the sponsorship of some influential E-sports teams, as well as the investment in customer acquisition promotion in the channel.

Because we are optimistic about the development of e-sports industry for a long time, we will continue to increase investment in E-sports related activities and team tactics. At the same time, with the upgrading of our products and the improvement of traffic conversion efficiency, we also plan to enhance channel promotion. Therefore, the absolute value of sales expenses in the future will maintain a stable growth, but we think that the proportion of sales expenses in revenue will continue to be optimized. Chen Shaojie said.

In terms of gross profit rate index reflecting enterprise profitability, Betta continued to improve in this quarter, at 20.8%, which was basically the same as that in the previous quarter. This is mainly due to the fact that the operating cost of Betta continues to be well controlled. The revenue cost including anchor signing and game copyright is 1.985 billion yuan, and the growth rate slows to 26%.

According to Betta, the total net revenue in the third quarter of 2020 will reach 2.64 billion yuan to 2.68 billion yuan, with a year-on-year increase of 42.1% to 44.2%.

Affected by the financial disclosure, Betta rose 4.44% to 15.96 shares / US dollar on August 10, and Huya rose 3.11% to 27.44 shares / USD; but at the end of the day, douyu and Huya both dived and fell, douyu fell 8.51% to 13.97 shares / USD, and Huya fell 9.83% to 24.04 shares / USD.

Support the anchor at the waist to find a new business model

There are generally two ways to recruit anchors for new games. One is that the platform will first excavate and guide high-quality anchors from similar game partitions to broadcast live in the new game partition. This can quickly ensure the content quality of the new game partition, so as to attract more new users through high-quality content.

The other is that the platform recruits a large number of new anchors through cooperative game associations to ensure that there is enough content supply in the partition and provide users with more content choices. In the process of live broadcasting of new games, operators will gradually discover potential excellent anchors and provide corresponding resource support to train them to become head or waist anchors of new partitions.

This is also the head off anchor strategy of Betta, reducing the dependence on the head anchor, focusing on the excavation and cultivation of the middle and low back anchor, and promoting the diversity of live content ecology through the middle waist anchor can ensure the content and flow of the platform.

In the past, the single revenue structure of Betta, which relies too much on the revenue from live games, has been criticized. Today, in the non game sector, Betta will continue to enrich the content ecology, providing food, life, show, outdoor, quadratic and other plates, with different content to meet the different needs of users.

In terms of innovation, Betta began to try to transform and find new business models. For example, the voice chat launched in October last year has maintained a steady growth trend in terms of flow, further improving the operation efficiency of the platform.

In terms of offshore business, Betta has made some overseas investment, including Southeast Asia, Latin America and India. However, due to the poor payment and user habits, it has maintained the operation of these markets and reduced the corresponding investment.

Chen Shaojie said that Betta attaches great importance to the Japanese market and has been involved since the second quarter of last year. For example, the live broadcast platform mildom of Betta was launched at the end of September last year, and the Japanese live game market survey report released by a third-party consulting agency in June this year shows that mildoms mobile download volume, user volume and user activity have maintained the forefront in the Japanese live game market.

Chen Shaojie said that the reason why Japan attaches importance to the Japanese market is that its overall game market size is second only to that of the United States and China. It has a strong tendency to consume mobile games and mobile game players. The consumption power of mobile games is about twice that of European and American countries. However, its development is at an early stage, which is not consistent with the scale of its game market, so it has great market potential.

Merger or antitrust review

Since the end of March this year, Tencent has promoted the merger of douyu and Huya. So far, Tencent owns 38% of the shares of douyu, which is the largest shareholder of douyu; Tencent owns about 36.9% of the shares of Huya and 50.9% of the total voting rights. Tencent has mastered the fate of two live game platforms.

It was reported on August 10 that Tencent had reached an agreement with huanju group and Dong Rongjie, CEO of Huya group, that Tencent would purchase 30 million shares of class B common stock of Huya and 1 million shares of common stock of class B from Dong Rongjie. The transaction will be completed before September 9. By then, Tencents shareholding ratio in tiger tooth will reach 51% and the voting right will reach 70.4%. The proportion of shares held by the betta management team remains unchanged.

From the financial reports of Betta and Huya, the two data are getting closer and closer. In the last quarter, douyu made every effort to catch up with Huya, and the total revenue continued to close, and the net profit exceeded Huya in the first quarter of 2020.

The analysis shows that Tencents promotion of the two mergers is undoubtedly the maximization of the benefits of live broadcast. The merger can not only drain the competition industry through live broadcast, but also resist the B station and Kwai Fu of the new incoming game live broadcast. For Betta and tiger teeth, the two traffic become one, which reduces the competition of anchor resources between platforms, and also reduces the internal friction between them. For Tencent, it can also get through the whole layout of the live broadcasting industry chain.

Ding Daoshi, an Internet analyst, told time finance that the merger of douyu and Huya will improve the bargaining power of the industry and have a better command of the discourse power. At the same time, it can also reduce some unnecessary competition, form a joint force, expand the content resource pool of both sides, and further explore the possibility of diversified development.

Easy view game analyst Liao Xuhua pointed out that the merger of the two companies can optimize the operation efficiency and unify the strategic direction; on the other hand, as a whole, it can strengthen the strategic coordination with Tencents game E-sports business.

However, the road of merger is not easy. It has been observed by legal circles that the merger of douyu and Huya has to go through the examination of the anti monopoly law. 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 financial report data, the total revenue of Huya in 2019 is 8.375 billion yuan, and that of Betta in 2019 is 7.28 billion yuan. Cao Wei, an associate professor at the school of civil and commercial law of Southwest University of political science and law, wrote in the 21st century economic report that the business income of fighting fish and tiger teeth has undoubtedly exceeded the above standards. This means that the merger of douyu and Huya must be declared to the Ministry of Commerce for concentration of business operators.

According to iResearch, the revenue of Chinas live game industry will reach 20.81 billion yuan in 2019, with tiger teeth and Betta accounting for 40.25% and 35% of the market share respectively. Cao Wei believes that after the merger of douyu and Huya, they may have reached a dominant market position, which should be strictly examined by the anti monopoly law.

Zhai Wei explained to Shidai finance and economics that according to the process, the State Administration of market supervision and administration should take the initiative to examine the merger, take a very cautious attitude, strictly analyze the possible restrictive impact of the merger on competition, and then make a decision on whether to approve the merger. If the general administration can approve the merger, follow-up observation is needed. Without approval, the merger will not be implemented.

Ding Dao Shi said that some new forces should be developed to balance these two platforms, for example, the Kwai Fu and B stations. In this case, the bargaining power at the bottom can be balanced and the game will not be monopolized by a few giants.

As of press release, the market value of Betta is US $4.435 billion and that of Huya is US $5.277 billion. It is roughly estimated that once they are combined, they will become a live broadcast giant with a market value of nearly 10 billion US dollars.

According to the Research Report on Chinas game live broadcasting industry in 2020 released by iResearch consulting, it is expected that the scale of Chinas game live broadcasting market will expand to nearly 40 billion yuan in 2021. The report also shows that the growth rate of live game users is gradually declining, from 18.2% in 2018 to 7.2% in 2021. Ai Rui consulting analysts believe that since 2019, no new independent game live platform has been established, indicating that the game live broadcasting industry has gradually become saturated. This means that even after the merger, Betta and tiger teeth will face development challenges. Liao Xuhua said that the new challenge in business may lie in the cooperation with Tencent games and e-sports, because the two companies were operating as relatively independent entities before, and how to integrate into Tencents entertainment system after that was a big new challenge for the team. Source: editor of time finance and Economics: Shi Chengchao source: editor in charge of time finance and Economics: Zhong Qiming_ NF5619

According to the Research Report on Chinas game live broadcasting industry in 2020 released by iResearch consulting, it is expected that the scale of Chinas game live broadcasting market will expand to nearly 40 billion yuan in 2021. The report also shows that the growth rate of live game users is gradually declining, from 18.2% in 2018 to 7.2% in 2021. Ai Rui consulting analysts believe that since 2019, no new independent game live platform has been established, indicating that the game live broadcasting industry has gradually become saturated.

This means that even after the merger, Betta and tiger teeth will face development challenges. Liao Xuhua said that the new challenge in business may lie in the cooperation with Tencent games and e-sports, because the two companies were operating as relatively independent entities before, and how to integrate into Tencents entertainment system after that was a big new challenge for the team.

Financial Times: Editor Shi Chengchao