Tencent Replaces Directors on DouYu’s and Huya’s Boards

  • Yesterday, Tencent appointed its general manager of the user platform department, Lei Zheng, as a successor director to serve on live-streaming platform Huya’s board of directors, replacing Xiaoyi Ma.
  • Today, Tencent appointed Song Zhou as a succeeding director on live-streaming platform DouYu’s board of directors to Ting Yin.
  • Tencent could potentially combine its esports and gaming-focused live-streaming platform portfolio companies in a merger of DouYu, Huya, and Penguin Esports.

Over the last two days, Tencent Holdings has appointed new directors to serve on live-streaming platforms and publicly-traded companies DouYu’s and Huya’s board of directors. Tencent is currently the controlling shareholder of DouYu, with a stake of approximately 37.2% and is the second-largest shareholder of Huya, with a stake of 39.4%.

First, Huya announced yesterday that Lei Zheng has been appointed by Linen Investment Limited, a wholly-owned subsidiary of Tencent Holdings Limited, as a successor director to serve on Huya’s board of directors, replacing Xiaoyi Ma, Tencent’s senior vice president and head of the game business. Currently, Zheng serves as the general manager of the user platform department of Tencent, where he first started as assistant general manager of the interactive-entertainment-operation in 2012.

Subsequently, DouYu International Holdings Limited today announced the appointment of Song Zhou as a succeeding director to Ting Yin, who had previously served as a director on the company’s board of directors since January 2019. Zhou has served as vice general manager of finance at Tencent Holdings Limited since 2011.

Recently, several financial analysts speculated about a potential merger of the two live-streaming platforms. So far, Tencent has made no official statement addressing a possible merger. Nevertheless, two facts could be an indicator that Tencent might actively look into such a business transaction. First, Tencent has opted to merge portfolio businesses sharing a market and similar products before. Second, the company is the largest shareholder in DouYu and has an option to purchase additional shares in Huya to reach 50.1% of total voting power in the company, which is exercisable since March 8. 

Furthermore, a potential merger could include Tencent’s proprietary esports live-streaming platform Penguin Esports. Chinese live-Streaming platform Bilibili, being a part of a potential merger, seems less likely given Tencent only holds a roughly 12.3% stake in the company and the platform’s key focus is anime and comics-related content with gaming and esports being a minor part of the business.

In 2016, Tencent completed a merger similar in nature to a potential merger of the live-streaming platforms, following the purchase of China Music Corporation. As a result, Tencent created Tencent Music Entertainment Group (TME), which now is a publicly-traded joint venture between Tencent and Spotify. According to investment research firm Smartkarma, TME’s three Chinese music-streaming services QQ Music, Kugou, and Kuwo combined for a market share of 76% in the domestic market as of July 2018.

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