Image source @ Visual China
Text | Parity School, authors | Zhibai, Lu Ren, editor| Zhao
Tiger tooth fighting fish, marriage to the half, the result of "premarital examination" has not been.
On July 10, the State Administration for Market Regulation banned the merger of Huya Company and Douyu International Holdings Co., Ltd. in accordance with the law.
The picture says...
The review shows that Tencent ranks first in the upstream online game operation service market share of more than 40%, while Huya and Douyu have more than 40% and 30% of the downstream game live broadcast market share, respectively, ranking first and second, with a total of more than 70%.
If Huya and Douyu merge, Tencent will further strengthen its dominant position in the game live broadcast market, which is not conducive to fair competition in the market and may detract from the interests of consumers. The additional restrictive conditions commitment plan proposed by Tencent cannot effectively address the above-mentioned competitive concerns.
In accordance with Article 28 of the Anti-Monopoly Law and Article 35 of the Interim Provisions on the Review of Concentrations of Undertakings, the State Administration for Market Regulation has decided to prohibit such concentrations of undertakings in accordance with law.
The regulatory sledgehammer finally landed, and in the six months of the merger review, the market value of Huya and Douyu has plummeted by more than half.
"Game live broadcasting" has increasingly become a traffic quagmire, and Huya, Douyu, and Tencent are all deeply involved in it and have not come out.
<h2>Whose dreams did antitrust shatter? </h2>
In the last decade, antitrust has gone from an unfamiliar word to a household name.
In 2014, Sinopec refused to sell bio-produced oil produced by Yunnan Yingding, and was sentenced to 3 million yuan in compensation and included it in the sales system. In 2015, Qualcomm paid an antitrust fine of 6.088 billion yuan to China and implemented a rectification plan.
On December 14, 2020, according to the Anti-Monopoly Law, Alibaba, Yuwen Group and Fengchao Group were fined respectively, of which Alibaba's fine amount was as high as 18.228 billion yuan.
On 7 July 2021, the State Administration for Market Regulation (SAMR) imposed penalties on 22 cases in the Internet sector under the Anti-Monopoly Law, of which Didi, which had been asked by the Cyberspace Administration of China to remove apps, involved 8 cases.
China's anti-monopoly measures are constantly escalating, regardless of the nature of the industry or enterprise, as long as there is indeed monopoly behavior, it will be included in the anti-monopoly investigation and punished.
On April 22 this year, the Supreme People's Court issued the "People's Court Intellectual Property Protection Plan (2021-2025)", which put anti-monopoly actions on the agenda, clearly stating that the trial of anti-monopoly and anti-unfair competition cases will be strengthened, so as to prevent the need for capital expansion and promote the healthy and sustainable development of platform economic norms.
The announcement of the banned merger of Douyu and Huya marks two obvious changes in anti-monopoly cases, one is to prevent in advance, and the other is to strengthen interpretation.
Previous anti-monopoly cases were often punished after the fact. For example, in the Qualcomm case, although the fine is huge, the monopoly fact has been generated, the harm to the interests of consumers has already existed, and the punishment can only recover the loss to a certain extent. From the fact that ant financial's listing was blocked and the merger of Douyu Huya was banned, it can be found that anti-monopoly measures are in advance, before monopolistic behavior occurs.
The explanation of the announcement is also clearer, the announcement reads that "Tencent's market share in the upstream online game operation service exceeds 40%, ranking first; Huya and Douyu's market share in the downstream game live broadcast is more than 40% and 30% respectively, ranking first and second, with a total of more than 70%." ”
Tencent Holdings, through its subsidiaries, owns a 36.9% stake in Huya, accounting for 50.9% of Huya's total voting rights. At the same time, Tencent is also the largest shareholder of Douyu, holding about 38.0% of the equity and voting rights of Douyu.
If the merger is successful, Tencent will form a monopoly in the game industry.
The circular also reads: "Tencent has the ability and motivation to implement closed-loop management and two-way vertical blockade in the upstream and downstream markets, which has or may have the effect of eliminating or restricting competition, which is not conducive to fair competition in the market, may detract from the interests of consumers, and is not conducive to the healthy and sustainable development of online games and game live broadcasting market norms." ”
In terms of turnover, the market share of Huya Douyu exceeded 40% and 30% respectively, exceeded 70% after the merger, active users, Huya and Douyu exceeded 45% and 35% respectively, and exceeded 80% after the merger, and the market share of both sides exceeded 30% in anchor resources, totaling more than 60%.
The centralized entity has an incentive to implement a two-way vertical blockade. On the one hand, Tencent, which has a game IP, can require other live broadcasting platforms not to report and live broadcast, such as the current watermelon video can not use the king glory live broadcast. On the other hand, the live broadcast platform can only promote Tencent's games. The connection between game vendors and game live broadcasting is too close, which has effectively affected the development of the industry.
In addition, Tencent Games has the largest market share, Douyu and Huya as the largest game live broadcasting companies in China, and the users of both are mainly young people. If you use a set of value discourses, it will have a subtle impact on young people, and then affect the values of the entire young group.
For example, Lu Benwei, the "brother of Douyu", instigated fans to scold people in the live broadcast room, which attracted criticism from the Central Committee of the Communist Youth League and focus interviews, and finally was permanently banned by Douyu. Douyu anchor Chen Yifa'er, in the chat ridiculed the "Nanjing Massacre", but also attracted the official media to criticize by name, and finally was banned.
Anchors, especially game anchors, have a large number of young fans, and their words and deeds have a great impact on fans. After the merger, Tencent has formed a well-deserved monopoly in its ability to influence the values of young people. And this monopoly of values is even more frightening than the monopoly of the entity.
<h2>Merge puzzles</h2>
In the past year, from the signal of merger to the prohibition of merger. The stock prices of Douyu and Huya are like a roller coaster, with Douyu as high as $20.54 and as low as $5.23. Huya peaked at $50.82 and started at $11.78.
The survivors who survived the bloody battles of the live broadcast rivers and lakes did not have a good life.
In 2010, Chen Shaojie, general manager of the Wuhan branch of Hangzhou Winger Network Co., Ltd., began testing online live broadcasting, with two projects under his command, Cool Show Live and Flying Fire Live. Although the two projects eventually died, it was fortunate that they accumulated the technology of live broadcasting.
In 2013, Winger acquired AcFun, and the team at Winger's Wuhan branch built a live broadcast project called AcFun Live Broadcasting. Later, Chen Shaojie and the winger president disagreed and parted ways, AcFun sheng broadcast independently, and in early 2014 Chen Shaojie changed its name to Douyu Live. After independence, Douyu developed very rapidly, signing well-known players and even teams in various games with heavy money, and in just three months after the name change, the daily active audience increased by 10 times.
In 2014, Douyu Live attracted the first round of investment, and Aofei Animation invested 20 million yuan in Douyu Live. Subsequently, in 2016, the B round received more than 100 million US dollars (about 700 million yuan) led by Tencent, and the C round received 1.5 billion yuan led by Phoenix Capital and Tencent.
The development path of Huya is completely different from that of Douyu, the predecessor of Huya Live is YY Game Live, backed by the era of listed companies gathering. Founded in 2005 and listed on NASDAQ in November 2012, Huanju Times is the largest Internet voice platform provider in China and is a team voice provider. It has a variety of products such as YY voice, multi-game play platform, etc.
The number of registered users reached 770 million, and the number of monthly active users reached 100 million.
Compared with Douyu, Huya has deep roots, solid technology and rich users, so Huya did not start the first round of financing until 2017, led by Ping An of China. In 2018, Huya completed the B round of financing, and Tencent exclusively invested.
With solid capital finances and experience in parent companies as listed companies, Huya also successfully overtook in the corner, leading Douyu and was listed on the New York Stock Exchange in May 2018. Douyu, on the other hand, was only successfully listed on the NASDAQ exchange on July 17, 2019.
The merger of Huya and Douyu has had a clue since 2018 when Tencent invested in Huya. At that time, Tencent put forward a condition for Huya, and in the next year, the third year, it could obtain control of Huya at a competitive price. On April 3, 2020, Tencent announced its holding of Huya.
Chen Shaojie, CEO of Douyu, also said in Douyu's 2019Q3 financial report: "Whether Douyu and Huya merge depends on the wishes of the major shareholder Tencent. ”
The live broadcast industry is too expensive, and Tencent, as the financial owner of the two leaders of the live broadcast industry, has become its inevitable desire to reduce internal rolls and control costs. The merger also has a precedent, in 2016, Didi, Uber merged, ending the era of burning money for online ride-hailing.
By October 12, 2020, the time seemed ripe. Huya and Douyu jointly announced that the two sides have signed a "merger agreement and plan" and are expected to complete the merger in the first half of 2021. Under the merger agreement, Huya will merge and acquire all the issued shares of Douyu through a "share-for-share" approach, and Douyu will become a wholly-owned subsidiary of Huya and delisted from NASDAQ.
Dong Rongjie, CEO of Huya, said: "If the merger with Douyu is successfully completed, we are very excited about the opportunities contained therein. ”
According to the merger plan, at the beginning, Tencent planned to transfer its own "Penguin E-sports" game live broadcasting business to Douyu, and after Douyu integrated Penguin E-sports, it would merge with Huya. After the merger, Tencent will have 67.5% of the voting rights of the new company and become the controlling shareholder of the company.
Everything seemed to be in line with Tencent's wishes, but unexpectedly, in November of that year, the wind direction suddenly changed. The State Administration for Market Regulation (SAMR) has issued the Guidelines for Anti-Monopoly in the Platform Economy for Solicitation of Comments. According to the requirements of the Guidelines, Tencent submitted an anti-monopoly concentration declaration for the douyu Huya merger case to the State Administration for Market Regulation in the same month.
After many times of supplementing information, the results of the review have finally come out today, and the announcement prohibits the merger of Huya and Douyu.
In the six months of the review, the data of Huya and Douyu fell seriously.
According to the public financial report, in the first quarter of 2021, the average MAU of Douyu was 192 million, the paid users were 7 million, and the proportion of payment was 3.6%, but the proportion of Payment of Douyu in the same period last year was 4.8%, a significant decline, and Huya also showed a similar degree of decline.
Huya's revenue in the first quarter was 2.605 billion yuan, an increase of only 8% year-on-year, and the performance of Douyu was even more ugly, with revenue of 2.153 billion yuan in the first quarter, down 6% year-on-year.
Figure / Huya's first quarter revenue of 2.605 billion yuan Source: Flush
Some analysts even said: "If the merger fails, Huya and Douyu can only fall into the situation of boiling frogs in warm water and slowly being eliminated." ”
<h2>The cruel story of the game live broadcast</h2>
Once the game live broadcast, is the market deserved darling, and douyu is the tide of this wave.
There is an unspoken rule on the track of the live broadcast platform: the one who gets the anchor gets everything. Therefore, when the platforms signed the anchor, they were very willing to bleed.
At the peak of Douyu, it spent 60 million yuan to directly poach six major anchors from Huya, including "five five open" and "hole master", and there was no difference for a while. The capital play of Douyu has attracted a large wave of capital to enter the game.
From 2015 to 2016, it was the most chaotic two years for the entire live broadcasting platform.
Dragon Ball Live, Battle Flag Live, Penguin Live, Panda TV, National Live have entered the game, Internet giants endorse, often dig up anchors, and the life of Panda TV seems to be doomed to the end of game live broadcasting.
Panda Tv led by Wanda Prince Wang Sicong was simply born with a golden spoon, and at the beginning of its birth, Wang Sicong attracted many e-sports stars by virtue of his identity as principal of Wang in the e-sports circle.
Less than two years after its establishment, Panda Live has received more than 1.65 billion yuan in financing, and Internet tycoons Zhou Hongyi, Industrial Securities Capital, and Light Source Capital have also joined the platform.
But even if the capital is so rich and the relationship circle is so hard, Panda TV still fell in front of the final circle, in the final analysis, for two reasons, burning money is too fast and it is too difficult to realize.
In the revenue of game live broadcasting, 80% comes from tips, especially the tips of local tycoon users, and local tycoon users follow their favorite anchors, which causes the value of anchors to rise.
The platform burned money to compete for a popular anchor, which became the crazy outpost of the industry.
The current Douyu anchor, Da Sima was once a Huya anchor, and when the contract did not expire, he directly jumped to Douyu. Huya sued Sima Da, claiming 10 million yuan, and it is reported that The liquidated damages of Da Sima are as high as 13 million.
The platform uses sky-high prices to dig up popular anchors, and then uses high liquidated damages to tie up anchors, which has become a matter that the live broadcasting industry is accustomed to. In particular, the fight between fighting fish and tiger teeth is even more tragic.
In addition to the competition of anchors, the competition for the right to broadcast events has become increasingly fierce.
Just when the merger of Douyu and Huya was rumored, Douyu used the CSGO event footage of Huya enjoying the exclusive broadcast right in the live broadcast without obtaining the authorization permission of Huya, and Douyu was finally awarded 1 million yuan by the court. This case has also become the first case of copyright infringement of live broadcasting of e-sports events in China.
In the extremely money-burning competitive environment, other live broadcast platforms, either bankrupt or live, only fighting fish and tiger teeth persisted to the final round.
But when the two entered the final round, they found that the original killer who gave them a fatal blow was not their original competitor at all. In the era of live broadcast platforms, crazy burning money, short videos have risen, which has greatly reduced the time that originally belonged to live broadcast platforms.
The path from video to game live broadcast by Kuaishou and Station B has also taken away many users of live game broadcasting, and even Station B directly shot and signed Feng Timo, a sister of the original Douyu, and took away a large number of users.
Standing in the finals, Douyu and Huya found that burning money to the end may face nothing.
As for Tencent, shortly after the announcement of the State Administration for Market Regulation, it issued an announcement to respond: "Today (10th), Tencent received the Announcement on the Decision on Prohibiting the Anti-Monopoly Review of the Merger between Huya Company and Douyu International Holdings Co., Ltd. made by the State Administration for Market Regulation. The company will conscientiously comply with the review decision, actively cooperate with regulatory requirements, operate in accordance with the law, and earnestly fulfill its social responsibilities. ”
I don't know how sad Tencent's heart is when it makes the announcement.
<h2>Write at the end</h2>
Weak growth, profitability difficulties have become the final intractable situation of the live broadcast platform, the two companies expected to reduce the "arms race" through merger, in the common crisis, the former enemy can also be as close as one.
But now, this wishful thinking has been terminated by the Anti-Monopoly Law. What remains in front of Douyu and Huya is a difficult way to survive.
Plummeting stock prices, bottlenecks in development, external competition, live broadcast platform to the present, how to give investors confidence, and how to clean up the current situation?
Whether it is broken or lonely, or lonely and dead, all this, only time to test.
But at least, as the big "parent" of the two major game live broadcasting platforms, the dream of Tencent Game Kingdom has been completely shattered.