China’s two leading game livestreaming platforms Huya (NYSE:HUYA) and Douyu (NASDAQ: DOYU), which are set to merge in a Tencent-orchestrated deal later this year, both reported financial results for the fourth quarter and full year of 2020 on Tuesday.
Guangzhou-based Huya generated RMB 2.99 billion (USD 458.3 million) in total revenues for the December quarter, up 21.2% year-on-year (YoY), but shy of market expectations which forecasted USD 471.7 million in quarterly sales. Meanwhile, Douyu’s fourth-quarter revenue totaled RMB 2.27 billion (USD 347.8 million) which exceeded market expectations.
On the earnings call with investors, Huya’s CEO Dong Rongjie explained that the merger with Douyu has been filed with China’s State Administration for Market Regulation (SAMR) and the deal’s review is currently ongoing. China’s SAMR has tightened the rules on reporting mergers and acquisitions in recent months as part of a wider antitrust enforcement campaign in the country’s powerful technology sector.
Douyu told investors that its teams were “working around the clock” to push through the merger with Huya, and affirmed that it is still on track to be completed in the first half of 2021, while the exact timing depends on regulatory approval.
Both firms have been beneficiaries of the COVID-19 health crisis in 2020 and continue to expand their user bases. Huya Live’s mobile monthly active users (MAU) reached 79.5 million in the fourth quarter from 74.2 million in the third quarter. Douyu’s mobile MAUs grew by just 6.8% YoY reaching 58.2 million.
China’s gaming entertainment sector is becoming more hotly contested, with platforms like Bilibili and Kuaishou, as well as tech giant ByteDance, all showing greater ambitions to penetrate China’s gaming community.
Huya’s share price fell by 9.22% to USD 22.36 in Tuesday trading after the earnings announcement, while Douyu’s stock price dropped by 5.81% to USD 12.33.