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Game streaming revenues in China set to skyrocket to $4.5bn following platform merger

Huya and DouYu's merger agreement will create a streaming behemoth
Game streaming revenues in China set to skyrocket to $4.5bn following platform merger

The games streaming market in China is set to generate $4.5 billion in 2020.

According to data from SafeBettingSites, the country's streaming industry is growing exponentially, with revenues up from $3.11 billion in 2019. At its current rate, the space could be worth $7.44bn by 2022.

A large proportion of this revenue originates from two streaming platforms, DouYu and Huya. This month, the two platforms entered a merger agreement, which will see DouYu morph into a subsidiary of Huya. The latter will also acquire all of the former's outstanding shares.

The deal was also mediated by Chinese tech behemoth Tencent, which has a pre-existing majority stake in Huya, as well as a 38 per cent hold in DouYu. The merger is set to complete in 2021 and Tencent will then hold a 67.5 per cent stake.

Stream of growth

However, the two companies have soared separately in the last year, with Huya seeing a 79 per cent rise in year-on-year revenue and DouYu seeing a 99.3 per cent rise, according to data from iResearch.

The two companies will also merge their userbases, which saw impressive growth in 2020. During Q2, Huya averages around 168.5 million monthly active users (MAUs) with DouYu following in the rearview with 165.3 million. Together, that's a new userbase of over 300 million.

The game streaming market in China is made up of around 340 million users, which means the newly merged Huya will have a majority hold on the current landscape. Tencent also owns or has stakes in the most popular games in the region, including a 1.5 per cent stake in Bluehole Studio, the developer of PUBG Mobile, and Honor of Kings, which Tencent publishes.

China is also leading the charge on gaming revenue for 2020, according to Newzoo. So far, it has generated $40.8 billion, with the US following closely behind with $36.9 billion. And as the space becomes more lucrative, more and more companies will seek to publish their titles in China. However, that alone comes with its own set of obstacles, and regulations in the country are getting tighter as a result.