www.research.hsbc.comDisclosures&Disclaimer:ThisreportmustbereadwiththedisclosuresandtheanalystcertificationsintheDisclosureappendix,andwiththeDisclaimer,whichformspartofit.PlayinterviewwithBinnieWongEquitiesChinaSeptember2019By:BinnieWongChinagamelive-streamingGameon:Initiatecoverageonthetwoe-sportsmarketleadersWeanalysetheopportunities,entrybarriers,andconcentrationrisksinChina’sgame-streamingmarketItssuccessisunderpinnedbythehugepopularityofonlinegamesandsynergiesgeneratedbyTencentInitiatecoverageonmarketleadersHuya(Buy)andDouyu(Hold).OurdeepdiveintokeymetricsshowswhywepreferHuyaSPOTLIGHT1Equities●ChinaSeptember2019Gameon–thebattlebetweenChina’stwoleadinge-sportsplatformsLivebroadcastinginChina,oneofthecountry’smanyextraordinaryonlinesuccessstories,isgoingfromstrengthtostrength.Whatstartedafewyearsagoasthestreamingofliveperformancesofentertainers,gameshows,andordinarypeoplechatting,dancingorsimplysharingtheireverydayexperiences,hasmushroomed.Oneofthelatest,fastest-growing,andglitziestoffshootsisgamelive-streaming–livebroadcastsofexpertsplayingblockbustermulti-playere-sportsgameslikeTencent’sLeagueofLegendsandHonorofKings.Thecontentmayhaveevolvedbutthebusinessmodelforlive-broadcastinginChinaremainsthesame.Thevastmajorityofrevenuecomesfromthesaleofvirtualgiftssentbyviewerstotheirfavouritee-sportplayers,whosharetheproceedswiththestreamingplatformandtalentagencies(intheUSandEuroperevenueonleadingplatformslikeTwitchcomesfromamixofadvertising,subscriptions,donations,andsponsorship).Themainattractionfortheviewerswhobuythesegiftsisthattheycaninteractwiththestarsoftheshow.China’sdomestice-sportsaudiencehit288min2018,withrevenuesreachingRMB13bn(USD1.9bn).Therewardsaresubstantial.Thetopplayers,knownasstreamers,arenationalcelebritiesandcangrossuptoRMB70mayearbeforerevenuesplits–thelive-broadcastingplatformusuallykeepsc.50%.Asidefromthepopularityofonlinegaming,theotherimportantfactorhelpingtodrivegrowthispolicysupport.Afterclampingdownonotherareasofthelive-broadca...
