By email@example.com (InfoseekChina)
(WSJ) Tencent Holdings Ltd. is in talks to invest in a Chinese game video streaming service, people familiar with the matter said, as the Internet giant tries to beef up its online games business by adding new marketing channels.
The Chinese company, whose main services include games and social networks, is close to completing an investment in Douyu TV, an online platform for live videos of people playing games, the people said. Douyu is similar to Twitch, a popular game video site that was acquired by Amazon.com Inc. last year for nearly $1 billion. Douyu is operated by Guangzhou Douyu Internet Technology, a startup backed by venture-capital firm Sequoia Capital China.
Financial details couldn’t immediately be learned.
The talks are part of Tencent’s efforts to maintain its dominant position in online games in China, the world’s largest market by number of gamers, and stem the revenue-growth slowdown from its biggest business. Tencent’s latest financial results released last month showed the rate of revenue growth in online games slowed to 17% in the second quarter from 28% in the first quarter.
Sites like Twitch and Douyu, where viewers watch videos of people playing games and comment on them, are popular among gamers world-wide. Such services could make fans more loyal and help prolong the shelf lives of popular games.
According to market-research firm Newzoo, there are now 446.3 million gamers in China, where game revenue is expected to reach $22.2 billion this year. While Tencent is China’s biggest online games company, there are signs of a slowdown in the business, as the market for games played on personal computers becomes more saturated and competition intensifies in smartphone games.
Douyu, founded in 2013, initially ran a video site with a different name before it launched Douyu TV in January 2014. Its management team is based in the central Chinese city of Wuhan.
Live-game broadcasts and professional video gaming as a spectator sport known as esports attract millions of dedicated fans in China, the U.S. and South Korea, where the competitive gaming culture developed earlier. Sites like Twitch and Douyu serve as online channels for gaming tournaments held around the world. Last October, 32 million people watched through streaming services the championship of “League of Legends,” one of the world’s most popular online games developed by U.S. company Riot Games Inc., which is owned by Tencent.
Newzoo estimates there are 113 million esports enthusiasts around the world and expects revenue from this market to surpass $250 million this year. Apart from hard-core fans, esports events also attract 147 million other occasional viewers, Newzoo says. While revenue from this market isn’t big, many game companies view competitive gaming and live broadcasts of game play as increasingly important marketing channels, analysts say.
Over the past year, Tencent has invested in a number of game companies. In May, it took a roughly 20% stake in U.S. mobile-games startup Pocket Gems Inc. for $60 million. In April, it bought a 14.6% stake in U.S. mobile-games firm Glu Mobile Inc. In December, it took a minority stake in Japanese game developer Aiming Inc. for an undisclosed amount.
Source: Wall Street Journal by Juro Osawa
Source:: Tencent Nears Deal With Chinese Game Video Streaming Platform Douyu TV