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Livestreaming startup Douyu raises its US IPO target

Tencent-backed Douyu reports strong Q1 amid fierce battle with compatriot Huya

After going into the black last quarter, Douyu, an e-sports live streaming service backed by Tencent Holdings, lifted the goal for its Nasdaq debut on Monday.

According to Douyu’s revised prospectus, the Wuhan, China-based company has raised to $629 million from $11.50 to $14 per American depositary share, while Douyu shareholders will sell an extra $314 million in equity. The business had earlier attempted registration of $500 million.

The rise in Douyu’s IPO goal arises as the firm recorded income of $222 million over the first three months of 2019, mostly from digital gift purchases to streamers and ads. The business recorded $544.5 million in income last year, twice as much as in 2017.

A Tencent subsidiary owns 43.1% in Douyu. Tencent also holds about a quarter of another live-streaming Chinese company, Huya, which was announced on the New York Stock Exchange in 2018.

Tencent’s stakes on both systems are an indication that the gaming company in China is hedging its bets in the fast-growing live streaming sector in the country. Chinese e-sports industry is anticipated to expand at a level of 24.7 per cent per year to achieve 39.8 billion USD ($5.8 billion) by 2023, according to a business prediction by iResearch published by Douyu.

READ: Tencent’s Game for Peace, replacement for PUBG rakes in $14 million in 72 hours

Meanwhile, the fundraising operations of Douyu and Huya in the U.S. show that they are poised to intensify their rivalry. While Douyu has recorded more average active monthly users than its competitor, Huya, based in Guangzhou, has the top edge in income, reaching $678.3 million in 2018.

In a report released on the equity study site SmartKarma, Arun George, an investigator at Global Equity Research, stated “Encouragingly, Douyu’s income development meets up with Huya” in the first half of 2019.

Although Douyu is recognised for its exclusive agreements with many of China’s leading streamers, Huya’s consumers are more mobile-based and are more likely to invest cash on the system than PC customers, George informed the Nikkei Asian Review. According to the company’s prospectus, Douyu is increasing its proportion of mobile users— which accounted for a record 31 per cent of all monthly active users in the first half— as well as its earning percentage.

Douyu and Huya, both claiming to be China’s No. 1 live streaming game platform, are also watching foreign market development. In 2018, Douyu purchased Nonolive, Southeast Asia’s live streaming service. In 2018, Huya began working through Nimo TV in Southeast Asia, which also went to Latin America.

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