Chinese game streaming platforms Huya and Douyu have begun slashing headcounts as China’s mass tech layoff continues, Chinese media outlet Tech Planet reported Friday.
Why it matters: The pair joined China’s large-scale layoffs among tech companies as the country tightens restrictions on the game livestreaming industry.
- Layoffs at Huya and Douyu are another blow for Chinese gaming giant Tencent, a major shareholder in both of the companies. The Chinese State Administration of Market Regulation (SAMR) blocked a merger deal between Huya and Douyu in July 2021 to avoid “further strengthening Tencent’s dominance in the game streaming market.”
- In mid-April, China resumed issuing gaming licenses to Chinese game makers after an eight-month freeze. But the regulator has yet to resume issuing licenses to overseas games.
READ MORE: INSIGHTS | Chinese tech giants are still slashing headcounts
Details: Huya’s layoff mainly affects its international business department, which has more than 200 employees, or around 10% of the company’s total headcount, according to the report. The company is planning a 70% cut in its international arm, while its domestic business will also face a 20% layoff. Douyu is reportedly planning for a 30% layoff, targeting teams for gaming business development and livestream agent services.
- The international teams at both of the companies will bear the brunt of the layoffs as they operate in a new business area that demands more investment, the report cites an unnamed employee of Huya as saying.
- Douyu said the layoffs are just part of their “normal human resources optimization,” according to the report.
- Regulatory headwinds and decreasing user bases led to weak financial performances for the two companies during 2021. Huya recorded a net loss of RMB 312.7 million ($49.1 million) for the fourth quarter of 2021 after consistently posting profits since its IPO in 2018. Douyu posted a net loss of RMB 193.2 million for the same period.
Context: Huya and Douyu account for a combined 70% of China’s game livestreaming market, the SAMR said in July 2021. Huya owns a 40% market share and Douyu 30%.
- Earlier this month, Tencent said it will shutter its game streaming platform Egame by June due to a “change in business strategies.”
- China’s gaming industry has felt the layoff chills since the beginning of this year, with many of the key players trimming their headcounts.