Tencent has discounts in China to earn a green light for a major videogaming union: sources

(Reuters) – Chinese internet giant Tencent Holdings Ltd has to offer discounts in a plan to merge the country’s two major live-streaming videogame sites to resolve concerns about trustworthiness, said two experts on case to Reuters.

Tencent, China’s No. 1 video and social media company first unveiled plans to merge Huya and DouYu last year into a tieup designed to streamline their promises in the companies, it was estimated with data company MobTech that they already have an 80% slice of market over $ 3 billion and growing rapidly.

But with concerned regulators that the agreement would prevail over Tencent, it is willing to negotiate for an agreement subject to terms, according to the people, who refused to be named because of the fragility of the case.

China’s State Administration of Market Regulation (SAMR) said in December that it was reviewing the unification.

Tencent, Huya, DouYu and SAMR did not immediately respond to Reuters requests for comment.

The tack change comes amid the fight against a monopoly in Beijing on China’s internet giants. The crackdown began with the 2020 shelter of the financial technology company’s $ 37 billion public offering, and has spread across the region, affecting share prices and prompting some to take precautionary measures before the focus.

An individual with direct experience of the contract said that the review of the union’s trust was a “long process”, but that the regulator had not declared any concrete issues to the companies regarding discounts. could be.

Huya and DouYu are ranked at No. 1 and No. 2, respectively, as the most popular video game streaming sites in China, where users drop in to watch e-sports contests and following professional gamers. Tencent is Huya’s largest shareholder with 36.9% and owns more than a third of DouYu, with both companies listed in the United States, and valued at a combined $ 10 billion market value.

“Tencent plays a key role in game publishing in China, and both live streaming sites would be the equivalent of gargantuan in the industry,” one of the people familiar with the matter told Reuters.

Announcing Huya-DouYu’s plan last October, Tencent said it aimed to wrap its own wholly-owned videogame live streaming business into Huya and DouYu’s unified businesses following their merger under Penguin’s arm .

This, however, has raised concerns, said those familiar with the matter. Tencent is seeking consumer approval that company-owned games cannot be broadcast live on other platforms without permission.

The Chinese tech giant had been using this requirement to block competitors, such as ByteDance, who are researching into a game scene, from using content for which Tencent has intellectual property.