Tiger Securities: tiger teeth and Betta will merge soon, and the era of paid live broadcasting is coming?

 Tiger Securities: tiger teeth and Betta will merge soon, and the era of paid live broadcasting is coming?

In this quarter, the income of Betta and Huya maintained a growth rate of more than 30%, both exceeding market expectations. Compared with previous quarters, core live revenue continued to slow. We can understand that during the whole epidemic period in the first half of the year, the external positive (housing economy) and negative (consumer demand) factors offset each other, and the two head platforms mainly rely on internal structural adjustment and naturally transition to a stable and reasonable growth period.

As Betta and Huya gradually reduce marketing costs from 2019 and sacrifice users for profit growth, their profitability has been significantly improved. In this quarter, under non GAAP, the net profit of Betta was 323 million yuan, with a year-on-year increase of 513.7%; the net profit of Huya was 351 million yuan, with a year-on-year increase of 106%. We can see that after the improvement of operational efficiency, the profit of Betta increases at a faster speed, which shows that Betta has done better in cost control.

1) For the live broadcast platform, Matthew effect is prominent

If the integration of platforms is completed, Tencent will be more proficient in coordinating the operation of games and E-sports events. The traffic of the platform will be rapidly concentrated, and the exposure of major anchors will be doubled. The Matthew effect will appear, and the strong will remain strong. For Tencent, it is very much hoped to see.

2) To the anchor: the threshold is raised, the competition is intensified, and the anchors discourse power is weakened

Before the merger, the anchor can choose which platform to join by considering the trade union, income sharing and the number of fans. However, after the merger, the anchors voice power has been weakened, and eventually evolved into a platform to choose an anchor from a platform. Therefore, higher requirements are put forward for the anchor, and the threshold of live broadcast will be raised accordingly. Especially for small anchors, the exposure opportunities are reduced, and the traffic is concentrated on the large anchors,

3) For users: it is necessary to adapt to the new form of advertising and paid live broadcasting in the live broadcasting room

From the perspective of monthly living scale and market share, the merger of Betta and tiger teeth will inevitably form a monopoly on live game broadcasting. It is likely to introduce the forms of watching 60 second ads in the live broadcast room and creating paid live broadcasting room (large-scale events, famous teachers classes, etc.) to promote income diversification. But for users, the combination of the two does not need to choose the platform, but these new live broadcast forms will affect the viewing experience.

For example, twitch has to watch 5-6 seconds of advertising, which we think will greatly boost advertising revenue. Because for the user groups who watch the live broadcast, their consumption demand and consumption ability are very potential and need to be tapped. Advertisers will be more interested in this intuitive and most efficient delivery form, such as mobile game companies.

4) Kwai tiktok, B station, and compete for user time.

In the past two years, with the help of short videos, Toutiao and station B, the development of mobile games, live delivery and other fields has been faster than that of douyu and Huya. One of the most important reasons is that their anchor sources are highly inconsistent with those of Betta and Huya, which come from performing arts, sports, business and other fields. Especially in Kwai tiktok, KOL will be more likely to attract traffic and boost the number of active users with fast and vibrant voice.

According to Aurora data, in the second quarter of 2020, the short video industry accounted for 23.8% of the total user time, with an increase of 2.7% month on month, surpassing the instant messaging industry for the first time and becoming the industry with the largest proportion of user hours.

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