Chinese Twitch-like game streaming website Douyu TV announced on Tuesday that it is wrapping up a Series B financing round of USD 100M led by tech giant Tencent and followed by Chinese online game developer Zeus Interactive. Return investors from last round, Sequoia Capital China and Nanshan Capital, also contributed.
Tencent, which owns two of the largest SNS apps QQ and Wechat and its own gaming business, invested RMB 400 million (USD 61.5 million) in the financing round, according to China Renaissance, the sole financial consultant to Douyu TV.
The rumor has been swirling since the latter half of 2014, and according to a WSJ leak in last September, Tencent’s investment seems to be a move to reinforce its top spot in China’s online games sector. A slowing in Tencent’s online game business can be seen in its 2015 quarterly financial results. Before investing in Douyu, Tencent took a 20% stake in a similar site called Longzhu TV.
For Douyu, an investment from Tencent means it can develop businesses other than game streaming. Founded in 2013 in Wuhan city in central China, Douyu is a platform that broadcasts live videos of people playing games. It changed its name to Douyu TV in January 2014.
This platform is a community for gamers to gather, broadcast, chat and comment on games. By owning one of these platforms, tech companies competing in the online game sector will be able to gain a big group of loyal fans for the games they produce.
According to Chinese tech blog Huxiu, the sudden booming of Twitch in 2014, which was later acquired by Amazon.com for nearly USD 1B, ignited the fire for game broadcasting in China, and drew tech companies to pour big bucks into the previously unknown video sites.
Besides Douyu and Longzhu, another two big players in this sector in China are Huya TV and Zhanqi TV. Huya TV was formerly called YY Zhibo, which was founded in 2012, and the chairman of its parent company is – you’ll never guess – Lei Jun, the founder of Xiaomi. Zhanqi TV is backed by Zhejiang Daily Media, a listed company in China.
Another aggressive player, Panda TV, was founded by Wang Sicong, who ranks at the top of the Chinese online celebrity list and is also the son of Wang Jianlin, the owner of Chinese real estate empire Wanda Group.
According to a 2015 Chinese gaming industry report, there were 534 million gamers in China in 2015, a year that saw RMB 140.7 billion in income generated by this industry in China. With such a big market, Tencent’s big expense becomes reasonable.
(Top photo from J.news.163.com)