Huya DouYu Merger is a Sign of Things to Come in Esports M&A

Sheppard Mullin Richter & Hampton LLP

Sheppard Mullin Richter & Hampton LLP

The streaming landscape has experienced its second major shakeup this year with Huya’s merger with DouYu on October 12, 2020. Huya and DouYu are China’s largest streaming platforms, averaging 169 million and 165 million monthly users respectively, and will combined be worth around $11 Billion USD. The merger positions the new entity as the largest esports platform in China, and makes it the de facto destination for esports eyeballs in the region.

This shake-up is coming off of Microsoft’s decision to functionally shut down its streaming service, Mixer, in June. As part of that move, Microsoft released its exclusive streamers from their contracts and took down the ability to stream to the site. The announcement came as a surprise at the time, given that up until then the platform had been making deals to exclusively host popular streamers, most notably its arrangement in August 2019 to host Ninja.

Both moves reduce competition in their respective regions during a year which was set to be have increased competitiveness with the start of a “streaming war” for exclusivity arrangements with streamers. DouYu and Huya were poised for a fierce fight over establishing dominance in China’s rapidly growing esports landscape. Although Huya and DouYu were competitors before the merger, both entities were heavily backed by Tencent, as is the case with most companies involved in China’s gaming landscape. The merger further consolidates Tencent’s continually growing esports efforts.

The merger is particularly relevant to those following the industry because it’s a signal that the industry is moving away from fractured landscape with many entities competing for dominance, and that consolidation will be a driving force as the esports industry grows.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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