Game live-streaming platform Douyu revenues rise in Q3, losses narrow

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Screenshot of Douyu’s logo. (Image credit: TechNode)

Game live-streaming platform Douyu reported strong revenue growth and reduced net losses for the third quarter as the company improved its monetization and benefited from economies of scale, while user growth on the platform slowed.

Why it matters: As the two largest live-streaming platforms in China, Douyu and rival app Huya have been locked in a battle for user attention. While Douyu has taken the lead in monthly active users (MAUs), it has been trailing Huya in terms of monetization.

  • Both platforms are backed by Chinese gaming giant Tencent.

“During the quarter, we continued to cultivate the vibrancy of our game-centric live streaming content ecosystem, while expanding our content coverage across all segments of the platform. Notably, our game live-streaming segment accounted for more than 80% of the total viewership in the quarter.”

—CEO and Director Chen Shaojie, during the earnings call

Details: Douyu’s net revenues for the third quarter surged 81% year on year to RMB 1.86 billion ($261 million), driven primarily by a jump in live-streaming revenues, hitting the high end of analyst consensus estimates compiled by Yahoo Finance.

  • Live-streaming revenues surged 83% year on year to RMB 1.66 billion during the quarter, powered by increases in both the number of paying users, which increased 66% year on year to 7 million, as well as improved average revenue per paying user (ARPPU).
  • Chen also cited the summer high season, a growing e-sports industry, blockbuster game title launches, and several game-focused mobile game smartphone models as growth drivers during the quarter.
  • Despite having 1.7 million more paying users in the third quarter than rival Huya, Douyu’s live-streaming revenues still trailed Huya’s Q3 figures of RMB 2.16 billion.
  • Gross profit rocketed 450% year on year to RMB 317 million, with gross margin also improving to 17% compared with 6% in the same period last year. During a call with analysts, the company attributed the growth to monetization improvements and economies of scale.
  • Douyu’s average MAUs in the third quarter grew 15% year on year to 164 million, leading Huya’s 146 million.
  • Douyu also significantly reduced its net loss in the third quarter 33% year on year to RMB 164.6 million, or RMB 5.88 ($0.83) per ordinary share from RMB 27.34 in the same year-ago period.
  • During the earnings call, CEO Chen Shaojie said that Douyu is actively exploring overseas monetization potential in countries such as Vietnam and Japan.
  • Douyu expects its net revenues in the fourth quarter to rise between 69% and 75% on an annual basis to fall within a range of RMB 1.96 billion and RMB 2.03 billion.

Context: Douyu listed on the Nasdaq stock exchange in July, raising $775 million, but its shares have stayed consistently under the $11.50 IPO price since its debut. Its shares closed up 2.5% on Wednesday at $7.84.