2005-2013 was the Bronze Age of the game live broadcast industry. Game live broadcast is still in its infancy, and show live broadcasts represented by 9158 and YY will dominate the world.

(warm reminder: There is a way to download the article at the end)

Core viewpoint:

2005-2013 is the Bronze Age of the game live broadcast industry. Game live broadcast is still in its infancy. Show live broadcasts represented by 9158 and YY will dominate the world. 2014-2016 is the silver era of game live broadcast. The explosion of the mobile game industry and the popularization of 4G networks have provided a growth soil for game live broadcast. Well-known live broadcast platforms such as Douyu , Huya, Zhanqi, Dragon Ball, Panda were born. Show live broadcast and amateur live broadcast are still developing rapidly. The "Hundred Broadcast War" broke out, and a series of live broadcast chaos attracted national supervision. The first round of reshuffle of the live broadcast industry began. 2017 has been the golden age of game live broadcast. The 100-broadcast war has settled. The game live broadcast industry has established a "two supers and many strong" pattern. Huya is the first to go public in the United States. Tencent invested in Douyu and Huya at the same time, accelerating the industry reshuffle. Quanmin Live and Panda Live have successively withdrawn from the market, but rising stars such as Xigua Video and Kuaishou are still interested in laying out game live broadcasts.

New development trend of the game live broadcast industry: 1. The monetization model is more abundant, extending from relying solely on user rewards to game intermodal, advertising, betting and e-commerce sales. The paid subscriptions of overseas live broadcast platforms have not been learned by domestic live broadcast platforms yet, and may become a future monetization channel; 2. The issuance of 5G licenses and the application of VR/AR technology are a major promotion for game live broadcast. Compared with the illusory "cloud games", game live broadcast is more likely to become the biggest beneficiary of 5G; 3. The first behavior preservation ban in the game live broadcast industry was born, the industry's self-discipline has been improved, and the operation is more standardized; 4. Tencent's strategic advantages are becoming increasingly obvious. Not only has mastered most of the e-sports content, but it also invested in Douyu, Huya and B stations to penetrate into the entire industrial chain.

The competition in the live broadcast industry of the game has been a long time, and each has its own advantages: Douyu's total financing amount exceeded Huya before its listing, but Huya was the first to log in to the capital market, brand and resources; Douyu's top anchor lineup is huge and has more events to undertake, but Huya's waist anchor ecology is good, closely integrated with the trade union system, effectively avoiding incidents that damage the platform's image such as default and job-hopping, improper live broadcast words and deeds; Douyu's monetization model is richer and the income composition is more balanced, but Huya's user payment rate/ARPPU/revenue amount is higher, cost-cost rate is lower, and profitability is better than Douyu; Douyu's total number of users is larger, but Huya's mobile MAU accounts for a higher proportion, and overseas business layout is ahead of Douyu.

Report content:

Game Live Industry Brief History: From the "Bronze Age" to the "Golden Age"

In 2004, Fu Zhengjun learned from the video chat rooms of South Korea's CNC and CClub and launched the video dating website "Jiujiu Love" in China. In May 2005, Jiujiujiu Love was renamed 9158.com Jule.com, and the live broadcast industry quietly made its fortune. At that time, "online live broadcast" was still synonymous with live broadcasts on show, and the concept of live broadcast on games had not yet been born. In a blink of an eye, fifteen years have passed, YY, Momo, Tiange (9158), Yingke and Huya have been listed one after another, and Douyu's IPO is almost completed. In these fifteen years, the live broadcast industry has completed changes, and game live broadcast has gone from nothing to the mainstream of the industry.

We can divide the history of game live broadcasts and even the entire live broadcast industry (including show, games, amateur live broadcasts) into three stages: 2005-2013 was the Bronze Age, with few participants, show live broadcasts are the only one in the world, game live broadcasts are not the mainstream; 2014-2016 was the Silver Age, the mobile Internet stirred up the wind, the live broadcast industry was placed at the forefront, show live broadcasts are moving towards the mobile end, game live broadcasts and pan-entertainment live broadcasts are all leading the way; 2017 to the present, the golden age, the battle of hundreds of broadcasts has been settled, the market structure has been established, and game live broadcasts have become the growth engine of the live broadcast market.

Bronze Age: Surrounded by wind and rain, show is respected

The earliest "long-term love" and the revised 9158 both directly borrowed from the "ten-person room" model in South Korea. Those who enter the room aim to chat and make friends; however, most people only want to see others, but not others, which goes against the original intention of Fu Zhengjun to do the video dating business.In order to solve this problem, 9158 adopted the method of forcibly kicking people without turning on the camera. The profit model of "ten-person room" is to charge "house fees", which cost 10 yuan a month and 100 yuan a year, and is settled through SP; this business model is not very efficient in monetization, and there are many hidden pitfalls in SP settlement in that era, so 9158 actually doesn't make much money.

In June 2005, 9158 "100 People Video Performing Arts Room" was launched. This is not only an increase in the number of people in a single room, but also an upgrade of the business model. The specific method is to invite popular girls from the "Ten People's Room" period to be anchors, and others watch online. If they like female anchors, they will send out virtual props "flowers" to show support. The show mode came into being. The 100-person show is far better than the 10-person room in terms of user experience and entertainment, and the monetization efficiency is higher. Fu Zhengjun, who has tasted the first sweetness, decided to carry forward the show, and the 100-person room, KTV room, online practice hall, etc. are launched one after another. In 2008, 9158's business ushered in explosive growth and gained capital attention. In 2009, IDG invested US$20 million in Series B, and in 2010, Sina invested US$30 million in Series C. In July 2014, the parent company of 9158, Tiange Interactive, logged into the Hong Kong Stock Exchange, and the oldest live show broadcast platform finally achieved its goal.

YY Live's rise was slightly later than 9158. In April 2005, Li Xueling left NetEase to establish Huya Times. From 2005 to 2007, Huya Times' core product is Duowan Game Network. In July 2008, YY Voice was launched. This product was originally just a team voice tool for MMO players such as World of Warcraft. However, with the explosive growth of user base and the improvement of product functions, YY Voice quickly became a UGC video content platform. In 2009, YY launched an electronic contracting system to standardize anchor management. In 2010, YY Live commercialized live performances on the platform, and its revenue reached 36 million that year. Despite the background of the game industry, in that era, the show was still the most popular content on YY live broadcasts. The unstoppable YY Live created huge revenue for Joyful Times. In November 2012, Joyful Times logged into the US stock market and became the first live broadcast Chinese stock listed.

9158 and YY are not the only live broadcast players in the "Bronze Age". In 2006, Liu Yan founded the video website Liujianfang. For a long time, Liujianfang was just an online video website, just like Ku6.com and Youku .com that were born in the same year. In 2008, Liujianfang saw that 9158 was extremely popular and began to actively transform into the show. This move was also complained by Youku founder Gu Yongqiang : "That thing Liu Yan did is too vulgar!" However, Liujianfang, which imitated 9158's show, failed to be listed separately. In 2015, it was acquired by A-share listed company Songcheng Performing Arts for 2.6 billion yuan. Three years later, the live broadcast industry was in chaos and turbulent. Liujianfang changed hands again and merged and reorganized with Huajiao Live with a valuation of 3.4 billion yuan. The Bronze Age of

Live broadcast industry lasted for 8 years. At that time, China's Internet industry was driving on the fast lane of development, users rushed in one after another, online games, e-commerce, and search were all booming, and portal websites were also in their heyday. In contrast, live broadcast is just an inconspicuous among many trends, and there are very few "unicorn" companies that have been born. However, the mobile Internet tide is coming, and the live broadcast industry will rely on the power of the wind to significantly broaden the user base and enter the silver era.

White Silver Times: The Battle of Hundred Broadcasts, the sea is circulating

In 2013, China's mobile game market sales revenue was 11.2 billion yuan, a year-on-year increase of 247%, becoming a new growth engine for the game market after PC games and web games, and its growth potential is far ahead of the two. In December 2013, the Ministry of Industry and Information Technology issued TD-LTE licenses to Mobile, China Unicom and Telecom, and China entered the 4G era. The explosion of mobile game industry and the development of e-sports events have prepared content soil for the rise of mobile live broadcasts and game live broadcasts. The formal commercialization of 4G has laid a technical breeding ground for mobile live broadcasts.

In January 2014, "ACFUN Life Broadcasting" was officially renamed Douyu TV and transformed into a game live broadcast. In the same year, Zhanqi TV was born, and YY's game live broadcast business was established separately. In 2015, Dragon Ball Live and Wang Sicong's Panda TV were established, and the battlefield for game live broadcast became increasingly crowded.In June 2016, NetEase CC was officially renamed "CC Live", and the brand upgrade showed that NetEase attaches importance to the game live broadcast business. Against the backdrop of the explosion of mobile game industry, game live broadcast itself has also created a demand for details. Platforms focusing on mobile games and e-sports live broadcasts have begun to emerge. In July 2015, Tentacle Live was launched, and in September 2016, Lion Roar Live came one after another, and the two fought in the mobile game live broadcast segment. In October 2016, Penguin Esports' official website was launched, relying on Tencent's powerful mobile game and e-sports competition, pushing the competition for mobile game live to a climax.

game live broadcast is in full swing, and pan-entertainment live broadcast (including life live broadcast, etc.) is not inferior. In May 2015, Fengyousheng founded Yingke, focusing on Pan Entertainment Live. The following month, Huajiao Live, a platform under Beijing Mijing Hefeng controlled by 360, began to fall in love with Yingke in the field of pan entertainment live broadcast. In November, Quanmin TV, which also focuses on pan-entertainment live broadcast, was launched. Its founder Hou Geting is the son of Hou Jianfang, the actual controller of A-share listed company Chuying and Agriculture and Animal Husbandry. In addition to these three companies, there is also a heavyweight contestant on the live broadcast stage of Pan Entertainment - Momo. In 2011, Tang Yan , which resigned from NetEase, founded Momo Technology; in December 2014, Momo was listed on the US stock market, and in September 2015, Momo went online and officially joined the Pan Entertainment Live Broadcasting Group; now, live broadcast has become Momo's main source of income.

must be pointed out that although "pan-entertainment live broadcast" lowers the threshold for anchors and enriches the content categories of live broadcasts, its actual realization ability is limited. Successful pan-entertainment anchors (especially the beauties among them) often follow the old path of live show broadcasts, with singing and dancing talents as the core content and local rewards as the core monetization method. Pan-entertainment live broadcast platforms such as Momo, Yingke, and Huajiao are all ultimately "a vague people play the stage and perform on show", which is increasingly different from traditional live broadcast platforms. The situation where "show, games, and pan-entertainment" is divided into three parts of the world, and gradually merges into "show, games" and two parts of the world.

In addition to the above-mentioned leading platforms, there are many live broadcast platforms that emerged from 2014 to 2016, including many products under well-known manufacturers, such as Tencent's NOW Live, Fantasy Live, Alibaba's Lai Chuang Live, Taobao's internal live broadcast functions, Baidu's Baixiu Live, Qixiu Live, Yixia Technology's Yihuan Live, China Mobile has also launched Migu Live. There are also more live broadcast platforms, which are grassroots participants who enter the market by taking the east wind of the mobile Internet. Traditional long video and video aggregation platforms have also launched live broadcast functions or sub-apps. 2016 is the "first year of mobile live broadcast" recognized by practitioners and users. According to our incomplete statistics, there were more than 200 manufacturers providing live broadcast services in China that year. The allusion of "Hundred Broadcast War" was born and became a classic scene in the history of China's Internet development.

Compared with the "Bronze Age", the live broadcast industry of the "Silver Age" has undoubtedly achieved a qualitative leap: the underlying technology is more advanced, and the number of platforms and user scale have reached a new level of magnitude. More importantly, the live broadcast industry (whether it is show, games or pan-entertainment) has been highly recognized by Internet giants and top investment institutions, and a number of listed companies and "unicorn" companies have been born. Live streaming, like games, e-commerce, social networking, and videos, has become a hot spot in the Internet industry.

n Everything looks the best, but the gift given by fate has long been secretly bidding for the price. When the vent appears, everyone wants to be a flying pig, but with limited market space, the consequence of excessive influx of participants is close contact until blood flows into a river.From the perspective of legitimate competition, small and medium-sized platforms are far inferior to those of the leading platforms in terms of technology, talents, capital, brands, flow and operational strength. Differentiated content must be made in the vertical field to make the best. However, most vertical fields have few audiences and are far from enough to support so many platforms. How easy is differentiation?

In order to survive in the fierce "hundred-broadcast war", live broadcast platforms show their magical powers: big platforms are rich and powerful. In that period when anchors were well-known far exceeding the recognition of the platform, high-paying poaching tactics were widely adopted, and an arms race was staged. Although the top anchors can indeed bring a lot of traffic, the cost is too high, which makes all parties in the competition suffer. Game live broadcast is the "hard-hit area" of the anchor war.

small platform is a different strategy and wanders around the edge of supervision, and gains prominence with the "pornography, gambling, drugs" that best stimulates primitive desires. In 2016, live female bathhouses, fake charity, and live erotic dances emerged one after another, and even left no bottom line. Drug use and live broadcasts created people, causing bad social impact and leading to mainstream public criticism. The endless chaos in live broadcasts eventually attracted strong national supervision.

On the one hand, in the content and anchor links, the regulatory authorities require the platform to strengthen review, the anchor must force real names, establish a blacklist system, and conduct random inspections every year; on the other hand, in the platform link, the market entry threshold is raised, and the live broadcast platform must have an ICP business license, an online cultural business license and an information network broadcast audio-visual program license. The difficulty of obtaining the first two certificates is relatively low, but the audio-visual certificate has two rigid requirements: 1. Has legal person status and is a wholly state-owned or state-owned holding unit; 2. The registered capital is at least 10 million yuan. For most live broadcast platforms, this is an insurmountable gap. Although some platforms have achieved "saving the country in a curve" through acquisitions, acquisitions, and multiple uses of one certificate, more platforms can only usher in a crash.

In this way, under the bloody battle and national regulatory policies, the rising "Hundred Broadcast War" is about to usher in a reshuffle, and the industrial structure of many strong people is becoming clearer and clearer. The historical mission of the "Silver Age" has been completed here. Compared with the Bronze Age, there are several very significant changes in the live broadcast industry in the Silver Age: 1. The number of live broadcast platforms first increased explosively, and then was eliminated bloodily; 2. Live broadcast content extends from pure show live broadcast to game live broadcast and pan-entertainment live broadcast; 3. The mobile terminal competes with the PC terminal, and finally the mobile terminal occupies a large number of traffic; 4. Almost all head and waist live broadcast platforms have the shadow of Internet giants or well-known trend investors from the beginning. In contrast, the Bronze Age was almost all stories of scattered roads; 5. In order to create a differentiated competitive advantage, the live broadcast platform began to focus on PGC content.

Golden Age: The dust has settled, and the two heroes compete for the dominance

In 2017, the entire live broadcast industry entered a period of merger and integration, and game live broadcast officially established a competitive pattern of "two super and many strong": Douyu and Huya are both superior. In 2017, the user scale of China's game live broadcast industry was 270 million. The MAUs of Douyu and Huya disclosed in the same period were 113 million and 83 million, respectively. The number of monthly active users divided by the overall user scale of the entire industry accounted for more than 30%. Penguin Esports, Battle Flag, Dragon Ball, Panda and other platforms rank in the second echelon. In May 2018, Huya entered the US stock market and became the first listed company in the game live broadcast industry. In April 2019, Douyu submitted a prospectus for the US stock market.

After entering the golden age of two super strong, the market structure of game live broadcast has undergone tremendous changes compared with the Silver Age. First, live broadcast content is obviously "regular", from the regulatory red line to the moral yellow line, tightening significantly; with the improvement of content supervision, violations that touch the red line have been greatly reduced, and only some small platforms have been free from pornography, gambling and drug content. However, the "cheating incidents" of top anchors have come one after another, and FPS games have become the hardest hit area. From 2017 to 2018, Douyu's " PlayerUnknown's Battlegrounds " frequently changed hands, and the melon-eating crowd even satirized the continuous cheating storm with the nickname "cheating X-fish".

Second, the brand influence of live broadcast platforms has been greatly improved, and the high-price poaching battle has ceased. In the silver era, the reason why the top live broadcast platform was at a high cost was that the anchor’s personal influence far exceeded that of the live broadcast platform. Signing a top live broadcast platform means having the fan traffic of the anchor. However, after the "Hundred Broadcast War" was settled, the influence of the top overlords such as Douyu and Huya increased greatly, and more and more users began to reside in their favorite live broadcast platforms. As a result, the arms competition has no cost-effectiveness, and the "anchor fans" are no longer as good as the "platform fans".

Third, the number of top anchors who were owed wages and breached jobs increased. The platform's wage arrears occurred frequently in the Silver Age, and Wang Sicong was questioned by the bear cat anchor in public. However, all the wage arrears happened to the small anchors. Because of their strong bargaining power, the top anchors never got back their wages even if the platform offered sky-high contracts. In the golden age, the market structure was stable, the brand recognition of the top platform increased, and the bargaining ability of the big anchors decreased, but their treatment followed the high standards of the 100-TV war period, and the relevant business rules were incomplete, resulting in many conflicts between the top anchors and the platform.

However, one of the true meanings of the Golden Age is the determination of the industrial structure and the gradual improvement of the rules. Regardless of whether the platform arrears wages or the anchors breach the contract and change jobs, it is not the norm that the game live broadcast industry should have. On February 14, 2019, Tencent issued the "Announcement on the Standardization of Live Broadcasting Behaviors by Tencent Games ", which listed 12 prohibited bad behaviors, of which Article 9 is "not complying with the spirit of the contract, unilaterally terminate the contract without reason during the contract period or sign other agreements with a third party to affect the normal performance of the contract", which is obviously to rectify the anchor's breach of contract and job jumping. Given that Tencent has become a strategic investor in Tiger Teeth and Douyu and has content resources, Tencent's regulations are almost the norm for the game live broadcast industry.

Fourth, the game live broadcast platform is gradually making profits. Show live broadcasts have already had profitability as early as the Bronze Age, but game live broadcasts are not the same. All game live broadcast platforms in the Silver Age do business at a loss, and their costs mainly come from two aspects: 1. High CDN costs. Live live video streaming has extremely high requirements for network bandwidth and transmission speed. In 2016, Panda Live revealed that the annual bandwidth cost is as high as 500 million to 700 million; 2. The contract cost of top anchors and the signing fee of tens of millions of yuan. Although it makes the platform suffer, there is no good solution in vicious competition. In the golden age, with the end of vicious competition and the maturity of the industrial chain, the losses of the first live broadcast platform gradually narrowed. According to Non-GAAP calculation, Huya Live achieved profit for the first time in Q4 2017, and achieved continuous profits in the last six quarters ending Q1 2019. Douyu recently updated its prospectus, with a net profit of 18.2 million in Q1 2019, achieving profit for the first time.

game live broadcast enters the golden age, which does not mean that the platforms that survived the "Hundred Broadcast War" can rest assured. On the contrary, the reshuffle continues, but it just enters the second half. Except for Huya and Douyu's "two supers" that turned losses into profits and advanced into the capital market, the second-tier platform was not smooth. In November 2018, Quanmin Live stopped operating; in March 2019, Panda Live, which was once glorious, then withdrew sadly because of the lack of funds.

is fifth, the rising stars in the Internet industry are still continuing to enter the game live broadcast. In January 2018, Xigua Video, a subsidiary of ByteDance, officially launched the live broadcast function. In June, it began to recruit mobile and PC game anchors with great fanfare to enter the field of game live broadcast. In February 2019, Kuaishou launched a new app called Dianmiao Live, which covers game live broadcasts, short videos, etc., and has not yet been promoted on a large scale. There are always many challenges in the seemingly solid industrial landscape, just as in the game industry, some amazing works from small and medium-sized manufacturers are occasionally emerging. It is still a mystery how far the rising stars can run on the game live track.

From the Bronze Age to the Golden Age, the game live broadcast has traveled for more than ten years. Standing at this node in 2019, we can confidently declare that "game live streaming has become the lifestyle of a generation of young people", which is the highest summary of the achievements of the game live streaming industry. But at the same time, this industry is still continuing to move forward and there are many problems to be solved.

New trends in game live broadcast: monetization, technology, operations and strategy

monetization model innovation: game intermodal, advertising, subscription and internet celebrity goods

All the time, the monetization ability of game live broadcast has been inferior to show live broadcast, because the interaction depth, interaction method and frequency between show anchors and audiences is worse than game anchors, and is very suitable for virtual prop reward monetization. Our exclusive monitoring data shows that the user recharge amount of Momo and YY, two platforms that focus on live show broadcasts, has remained more than twice that of Huya since 2017, and the gap is very obvious. Although Huya and Douyu have achieved profitability, the profit level is not high. Improving monetization capabilities is the top priority of game live broadcast platforms at present. The monetization method of the

game live broadcast platform was originally inherited from the virtual prop rewards from the show live broadcast. As time goes by, advertising, game transportation, live broadcast betting and other monetization methods gradually emerged. However, up to now, rewards are still the main revenue force of game live broadcast platforms. In 2018, Huya’s user reward revenue accounted for more than 95% of revenue, and Douyu’s reward revenue accounted for more than 85%.

let us look overseas. The monetization model of leading platforms such as Twitch and Youtube is very different from that of domestic game live broadcast platforms. Advertising accounts for the majority of their revenue, and there are paid subscriptions and content payments, which happen to be what domestic game live broadcast platforms lack. The differences in industrial development path, development stage and cultural background determine the different monetization modes of domestic and foreign game live broadcast platforms, but we believe that subscription and content payment will inevitably become the exploration direction of domestic game live broadcasts.

In fact, compared with overseas, there is a ready-made monetization model in China that is more worthy of reference by the game live broadcast industry - Internet celebrities bringing goods. The rise of short video platforms and live broadcast platforms has made UGC content boom, and its direct consequence is to cultivate a large number of KOLs. KOLs can use their personal influence to direct fan traffic to e-commerce platforms, which can promote purchases very efficiently. Station B has just begun to plan the Internet celebrity sales model, and its e-commerce revenue in Q1 2019 was close to 100 million, which shows its monetization efficiency.

As early as the Bronze Age and Silver Age of the live broadcast industry, there were already game KOLs advertising their Taobao stores in videos, such as DOTA World Champion 09, and DOTA masters Nada, Bullfrog, PIS, etc. who were once active on the 11-match platform. The communication channel at that time was not live broadcast, but long videos. Later, this model was inherited by live broadcast and became the main means of monetization of early game anchors. However, anchor e-commerce and internet celebrities are not the same. The former uses platform traffic, but the platform does not participate in the sharing. All profits are exclusive to the host; the latter platform participates in the sharing of the sharing is a new monetization method for the platform. At present, Douyu and Huya have not started the Internet celebrity sales model on a large scale, and the share with the host is limited to reward income. In theory, the platform has the right to participate in the share of any behavior of using platform traffic to monetize. The game live broadcast platform is still relatively lagging behind in this regard. I believe there will be more attempts in the future.

Technology Innovation: Based on 5G, VR/AR has come.

live broadcast has extremely high requirements for network transmission speed and encoding and decoding technology. If these two aspects are not done well enough, the user's viewing experience will be greatly reduced, which will affect the user's retention. Even the leading platform Douyu is often teased by barrage because of the blurred Blu-ray 10M image quality, "Douyu refreshes my understanding of Blu-ray image quality." Nowadays, 5G licenses have been issued, and the basic network transmission rate has jumped to a higher level, preparing conditions for many technological innovations of the game live broadcast platform. Instead of relying on the illusory "cloud games" becoming mainstream, it is better to expect the game live broadcast to a higher level.

In 2018, Huya took the lead in increasing the live broadcast image quality code rate from 10M to 20M, and realized two major technological innovations: "Open in seconds" live broadcast screen and AI barrage function. Douyu chose to follow up after that. Is the live broadcast quality important? Of course it is important! For loyal e-sports fans, only 4K resolution + frame rate above 60 can fully utilize the game quality and reflect the sense of superiority; how can they tolerate watching live broadcast content with super-clear quality? Moreover, the higher the level of e-sports activities, the more test the operation, and the higher the image quality can undoubtedly reflect the operation in a meticulous manner.

In addition to improving live broadcast code rate and clarity, the popularity of VR/AR has also opened a new door for game live broadcasts. As early as 2016, V Club began to use AR technology to display the hero BP process. In July 2017, YY tried AR live broadcasts and cooperated with its gold anchor MC Tianyou to hold an AR treasure hunt. In April 2019, Huya successfully achieved the first 4K+5G high-definition outdoor live broadcast in the domestic live broadcast industry and the first 5G mobile VR live broadcast in the country. In May, Douyu applied 5G+VR high-definition live broadcast at Chengdu International Equestrian Carnival.

Operation standardization: the proper meaning of industrial maturity

During the "Hundred Broadcast War", the national regulatory authorities formulated a series of laws and regulations and entry thresholds, and completed the first round of restricted zone demarcation of the game live broadcast industry. However, the red line is just a bottom line that cannot be touched. There are still many behaviors in the live game industry that violate morality, game rules, and hinder reasonable competition, such as cheating, breach of contract and job change, infringement, etc. The operation of the entire industry needs to be further standardized.

In the "Announcement on the Standardization of Live Broadcasting Behaviors" issued by Tencent in February 2019, in addition to Article

9, regarding the violation of contract and job-hopping regulations, it also includes prohibiting the dissemination of indecent, false and vulgar information; prohibiting the dissemination of private servers, Trojans, plug-ins, viruses, agent training and such information; prohibiting infringement of others' privacy and disclosure of other people's information without permission; not infringement of the copyright of game manufacturers and content creators, and injuring the rights and interests of content creators or copyright holders through any means. It can be seen that within the red line drawn by the state regulatory authorities, the yellow line within the industry has also begun to become clearer.

In November 2018, Tencent sued Xigua Video's three related operating companies to the Guangzhou Intellectual Property Court on the grounds of copyright infringement and unfair competition. On January 31, 2019, the Guangzhou Intellectual Property Court made a judgment: From now on, Yuncheng Sunshine Culture Media Co., Ltd., Toutiao Co., Ltd., and Beijing ByteDance Technology Co., Ltd., which are associated with Xigua Video APP, will immediately stop live broadcasting of the game content of "Honor of Kings". The first ban on behavior protection in the domestic game live broadcast industry was born, which is of great reference significance for the future copyright protection of the game live broadcast industry.

The game live broadcast industry involves many subjects, including game copyright owners, anchors, event organizers, content production and dissemination parties, and platform parties. Every interactive link has many tasks that require standardization and standardization. The announcement issued by Tencent is just the beginning of industry self-discipline and autonomy. In the future, more companies, industry associations and participants from all parties need to join.

Tencent has obvious strategic advantages: from content to platform, all control

Tencent is not only a giant in the global game industry, but also Tencent’s strategic advantages in the domestic game live broadcast industry are becoming increasingly obvious. First of all, Tencent has invested in two major game live broadcast platforms, Douyu and Huya, and has invested in B station, which is quite influential in game live broadcast. Among them, the shareholding ratio in Douyu is 43.1%, which is the largest shareholder; the shareholding ratio in Huya is 31.5%, which is the second largest shareholder; the shareholding ratio in Bilibili is 12.3%. No matter who wins the battle between Douyu and Huya, Tencent is the winner behind it.

Secondly, the birth of the first ban on preservation of live game behavior means that in the future market competition, the protection of content copyright has been legally available. Only by obtaining the copyright holder’s approval can the host and platform broadcast the corresponding content live.At present, "League of Heroes", "DNF", "PlayerUnknown's Life: Escape", "Peace Evil" (formerly "PlayerUnknown's Life: Exciting Battlefield", "Cross Fire" and "Glory of Kings" have almost seized more than 90% of the popularity of all game live broadcast platforms, and these products are all under Tencent, so on the content side, Tencent has absolute dominance. Douyu and Huya can rest assured, but for other game live broadcast platforms, how to deal with the competitive relationship with Tencent is the most serious problem.

Tencent is also far ahead in the organization of e-sports events: KPL (Honor of Kings Professional League) established the salary cap and transfer system for the first time, and became one of the most popular e-sports events in China; in 2019, LPL (League of Legends Professional League) was also reorganized by Tencent and its subsidiary Riot Games, and the popularity of the event increased. From upstream game products, to midstream e-sports events, to downstream live broadcast platforms, the entire industrial chain has fallen into the hands of Tencent.

Who can challenge Tencent's position as the "behind the scenes" in the field of game live broadcast? NetEase has little hope. It has failed to succeed in e-sports games, and its own CC live broadcast platform is relatively low; the "Toutiao" Xigua Video has been blocked by Tencent's content, making it difficult to go to a higher level; Alibaba has never invested any resources in the field of game live broadcast; the live broadcast functions of Kuaishou and Douyin are all focused on show, pan-entertainment rather than game live broadcast. Looking around, unless there is a super "earthquake" in the Internet industry, Tencent's ability to control the game live broadcast industry is irresistible and irresistible.

Investment target: Douyu VS Huya, what are the similarities and differences between the two heroes?

Operation Data: Douyu Users More, Huya Pays Better than

According to the official announcement of Douyu and Huya, since 2016, Douyu's total MAU has been ahead of Huya. In Q1 2019, Douyu's total MAU reached 159.2 million and Huya was 123.8 million. Douyu's MAU advantage mainly comes from the PC side - the MAU on Douyu's PC side in Q1 2019 was 110 million, while Huya only had 69.9 million. This is inseparable from Douyu's first-mover advantage on the PC side back then.

is on the mobile terminal, and the situation is just the opposite: from 2016 to Q1 2019, the MAU of Huya mobile terminal was higher than Douyu. In Q1 2019, Huya mobile MAU was 53.9 million, accounting for 43.54% of the total MAU, a slight decrease from 2018; Douyu mobile MAU was 49.1 million, accounting for 30.84%, a slight increase from the previous year. The growth rate of Douyu mobile terminal MAU has been higher than that of Huya since last year.

Although the total user scale is not as good as Douyu, Huya's payment rate is higher. In 2018, Huya’s annual payment rate was 4%, while Douyu’s annual payment rate was only 2.8%. In Q1 2019, Huya's quarterly payment rate increased by 0.1pct month-on-month to 4.4%; Douyu's quarterly payment rate was 3.8%, a significant increase of 1pct month-on-month, and a year-on-year increase of 0.9pct. Now, the quarterly payment rates of Douyu and Huya are both at the highest level in history, and we estimate that they will set new highs in the next few quarters.

Huya's user ARPPU is also higher than Douyu. In 2018, Douyu ARPPU was 208 yuan, Huya ARPPU was 279 yuan, Douyu ARPPU in Q1 2019 was 226 yuan, and Huya was 288 yuan. Since Q1 2018, the difference between Douyu and Huya quarterly ARPPUs has basically remained above 60. To sum up, the total number of Douyu users is higher than that of Huya, but the advantages are mainly on the PC side; Huya's total mobile users, total payment rate and ARPPU are all higher than Douyu.

Finance Data: Huya makes profitable and has stronger

…

Anchor Ecology: Douyu Gods Noisy, Huya is ecology complete

Since its establishment, Douyu has been very fierce in competing for top anchors. In the past few years, it had many wars of words with Huya and Panda. After Panda Live was closed, the new owner chosen by LOL popular anchor PDD is Douyu. On July 10, 2019, among the top 10 anchors in the Xiaohulu Index ranking, Douyu occupied 6 seats, while Huya only occupied 2. You should know that this index covers three major live broadcast categories: show, games, and pan-entertainment. Douyu actually has such dominance in the entire live broadcast market, which shows how strong the ecology of its leading anchors is.Official data disclosed show that as of the end of 2018, Douyu signed exclusive live broadcast contracts with 50 of the top 100 domestic game anchors, including 8 top 10 anchors; of which 48 former professional players signed attracted 120 million viewers.

If you are a live game user, then you must be familiar with Wei Shen, XDD, 17SHOU, Feng Timo, Zhou Erke , Chen Yifa, Lu Benwei , Yi Xiaotuantuan, pigff, paopao, Xue MM, Zhou Lili... These popular top anchors all became famous in Douyu.

has advantages and disadvantages for pursuing top anchors. The advantage is that it can integrate fan traffic with top anchors, which is also the main reason why Douyu's total MAU exceeds Huya. But its disadvantages are also obvious: the contract contracts and salary of top anchors are high, and Douyu's huge content costs are mainly spent on top anchors. Moreover, the fans of top anchors have too strong influence, which is not a good thing for live broadcast platforms.

Compared with this, Huya presents a completely different anchor ecosystem, that is, with a mid-level anchor as the core. If the flow distribution of Douyu is an inverted pyramid, then the tiger teeth are spindle-shaped. The guild system and super operational capabilities have always been regarded as the deepest moat of Huya, and it is also the place where Dong Rongjie is proud of. In 2018, the number of active anchors in Huya Yue exceeded 666,000, far surpassing the second in the industry. Huya’s powerful guild system, rooted in YY live broadcast, is difficult for competitors to imitate in the short term.

is closely integrated with the guild system. In addition to making Huya’s traffic operation more reasonable, it also has a great advantage: it makes the cooperative relationship between the anchor and the platform more standardized, and at the same time effectively constrains the anchor’s behavior to avoid breach of contract and job-hopping, improper live broadcast words and deeds. Therefore, the number of incidents such as being unpaid, breached contracts and job-hopping, and cheating has been confirmed, has been far less than that of Douyu.

cash flow method: Douyu's revenue distribution is more balanced

Compared with Huya, Douyu's dependence on user rewards is slightly less. In 2016, among Douyu's operating income, revenue from user rewards accounted for 77.7%, advertising and other revenue accounted for 22.3%. During the same period, Huya's revenue from rewards accounted for as high as 99.4%. However, Douyu's user reward revenue is gradually expanding. In Q1 2019, the proportion of revenue from advertising and other businesses fell below 10% for the first time, while Huya's advertising and other revenue increased slightly.

Douyu's monetization methods are more diverse than Huya, which is also experienced on the homepages of the two live broadcast platforms. Douyu's official website has "games" and entrances, which can import a large number of viewers into the partners' web games and mobile games. We see that two top new products, " Game of Thrones: Winter is coming" and "One Punch Man: The Strongest Man" have appeared in the game list on Douyu's official website. On the other hand, Huya does not have a first-level entrance to "game" and does not seem to attach much importance to the diversion of partners' games.

However, although Douyu's revenue composition is more diverse than Huya, from the absolute proportion, both platforms rely heavily on live broadcast rewards, and the revenue composition is still too single. This is a common problem in the game live broadcast industry, and all participants need to change together. The "Internet celebrity brings goods" model we proposed above may become an ice-breaking choice?

live broadcast content: Douyu event is more perfect

On the game live broadcast platform, the most popular content is undoubtedly e-sports games. Products such as "Glory of Kings", "Peace Elite", "League of Legends", "PlayerUnknown's Battlegrounds", "Cross Fire" not only have extremely strong competitive attributes, but also hold a large number of e-sports events every year. Professional events, especially the top events, are one of the killer weapons for game live broadcast platforms to attract users.

Douyu's control over head events is ahead of Huya. According to our incomplete statistics, Douyu undertakes more e-sports events than Huya in 2018. For example, Douyu's own Golden Prix has become the qualifier for the Chinese region of PUBG FSG.In the game categories of "CS:GO", "The Strongest NBA" and "Naruto", Douyu is also organizing large-scale events, which is quite difficult in live broadcast platforms and is conducive to forming a multi-level audience base.

must point out that to hold professional events, you must obtain authorization from the game content party, pay costs or splits; to promote event activities, advertising fees and even ground promotion fees must be paid. Therefore, Douyu's content cost ratio and sales rate continue to be higher than Huya, at least partly because there are more events. The question is, can efforts bring enough rewards? You can only look at it while walking.

Overseas expansion: Douyu went overseas was blocked, Huya took the lead in

went overseas not only to be a new strategic direction for domestic game manufacturers, but also overseas is a blue ocean market that needs to be developed for live broadcast platforms. Domestic live broadcast platforms go overseas are divided into two stages: the first stage was in the "Black and Silver Age", the main reason is that there are too many participants in the "Hundred Broadcast War", and the domestic market has completely become a sea of ​​blood. In addition, the regulatory authorities have taken rectification, the domestic market competition environment is extremely cruel, which forces manufacturers to go overseas; the second stage was in the "Golden Age". After the "Hundred Broadcast War" was settled, the lucky live broadcast platforms participated in the second round of reshuffle in China, while starting to seize new increments overseas.

In 2017, after Douyu completed its Series D financing, it participated in the investment in China's overseas mobile video live broadcast platform Nonalive. The platform was originally launched on Indonesia , and it topped the best-selling list of Indonesia App Store in 2016. The operating entity has been changed to Douyu Hong Kong. At the same time, Douyu has established a subsidiary in Shenzhen to specialize in overseas business expansion and recruit local employees in Southeast Asia. However, Nonalive is a pan-entertainment mobile live broadcast platform, which is quite different from the game live broadcast that Douyu itself is best at.

In 2018, Douyu launched Doyo, an application that focuses on live game broadcasts in Southeast Asia. Unfortunately, it was exposed that more than 70 people in overseas business departments were laid off just two months after Doyo was launched. Although Douyu's official reply to the layoffs is just a normal personnel adjustment and optimization, Doyo has completely retired from the Southeast Asian App Store list, and Douyu's overseas business has encountered setbacks.

In comparison, Huya's pace of going to sea is more stable. In May 2018, Nimo TV launched by Huya entered the Southeast Asian market, logging in to Indonesia for the first time. Its content focuses on Tencent’s overseas mobile games "PUBG Mobile" and "Arena of Valor" and local popular games. As of May 2019, Nimo TV has been launched in Southeast Asia and Latin America, achieving successful operations in 10 countries including Indonesia, Vietnam, Thailand, , Brazil, , Mexico, etc. Official data shows that as of December 2018, Nimo TV has had more than 11.5 million MAU overseas and 20 million Android downloads. On June 6, 2019, Nimo TV held a press conference in Brazil, announcing that it will work with local top anchors to jointly prosper the game live broadcast ecosystem, and strive to build Brazil's number one mobile game live broadcast platform.

Summary: Love and kill each other, each has its own fortune

The two heroes compete for the world for a long time, and they can fight until now without a winner, which is enough to show that both have their own fortune. Douyu's total financing amount before listing exceeded 7 billion yuan, higher than Huya's 4.5 billion yuan, and Tencent's investment in it was even higher. But Huya took the lead in logging into the capital market, becoming the first live broadcast stock in game, and it was slightly better in terms of revenue and profitability.

Douyu's top anchor lineup is huge, the user scale is unparalleled, and the number of events undertaken is more. However, the Huya Xiaoli anchor ecology is good, closely integrated with the trade union system, effectively avoiding incidents that damage the platform's image, such as breach of contract and job-hopping, improper live broadcast words and deeds. Douyu's monetization model is richer and the revenue structure is more balanced. However, Huya's user payment rate, ARPPU, revenue amount is higher, the fee rate is lower, and its profitability is better than Douyu. Douyu’s user base is larger, but Huya’s mobile MAU accounts for a higher proportion, and its overseas business layout is ahead of Douyu. In short, Douyu and Huya have two game live broadcast giants. Douyu’s entry into the capital market is not the end of competition, but the beginning of the next competition.

Now, Douyu and Huya are "comprehensive live broadcast platforms based on game live broadcast", with content spanning three major categories: games, show venues, and pan-entertainment. For Huya, thanks to the YY system, the path of "game + live show" can be realized relatively smoothly, and a symbiotic relationship with the guild can also be formed. Judging from historical data, tiger teeth seem to be more efficient in management. However, in the face of Douyu's powerful top anchor resources and e-sports competition resources, Huya must concentrate on dealing with it. Similarly, for Douyu, how to achieve more efficient monetization of a traffic-oriented show live broadcast, or how to develop a better monetization model for game live broadcasts, will be a continuous challenge.

Warm reminder: If you need the original document, you can log in to the Future Think Tank www.vzkoo.com on the PC to search and download this report.

Follow the official account "Future Think Tank" to get the latest content in a timely manner.

(Report source: Guojin Securities; analyst: Pei Pei)