HUYA – the Amazon’s Twitch of China

 

 

 

Introduction

HUYA Inc. is a leading game live streaming platform in China with a large and active game live streaming community. Established in 2014 as a game live streaming business unit of YY Inc. (a leading online video streaming platform in China), Huya got independent in August 2016. HUYA cooperates with e-sports event organizers, as well as major game developers and publishers, and has developed e-sports live streaming as one of the most popular content genres on its platform. Building on its success in game live streaming, HUYA has also extended its contents to other entertainment genres, such as talent shows, anime and outdoor activities.

Value Creation

HUYA rides on the wave of eSports boom in China. HUYA creates a two-sided platform, i.e., an open marketplace, to connect content creators (e.g., video game broadcasters) and users (e.g., game live stream viewers).

On the content creator side, HUYA has established deep cooperation with both broadcasters and talent agencies to deliver high-quality, fun and trendy live streaming contents. HUYA opens registration for any broadcaster. HUYA’s large broadcaster base consists professional gamers as well as amateurs. HUYA has more than ~700,000 broadcasters on its platform. HUYA proactively manages and supports popular broadcasters by developing individualized promotion strategies. In order to maintain differentiation, HUYA will enter customized agreements with promising broadcasters, mostly with an exclusive live stream commitment and revenue split incentive for 1~3 years. HUYA also cooperates with 24,000 talent agencies to manage broadcasters.

On the user side, HUYA’s user base consists mainly the young generation with an interest in games and other forms of entertainment. HUYA reached 117 million average MAUs in China by Dec. 2018. Any users may watch live streams on HUYA. In order to encourage users to register, HUYA offers certain popular interactive social features to registered users only, such as bullet chatting, messaging, and following their favorite broadcasters. Registered users can also enjoy premium social status and send virtual gifts to broadcasters.

HUYA offers comprehensive live streaming content with a primary focus on games. HUYA leverages its close relationship with game developers, publishers, popular game broadcasters, and e-sport leagues and players to identify and offer trendy game live streams. HUYA’s live streaming content covers over 3,300 games with a total 27.3 million streaming hours of game content by Dec. 2018. HUYA also aggressively captures e-sport games. HUYA has cooperated with 140 e-sports event organizes and provided streaming services for 760 e-sports tournament matches by Dec. 2018. HUYA also organizes many e-sports tournaments.

As HUYA expands its user base overtime, HUYA also encourages its broadcasters to create and share other entertainment contents, e.g., talent shows, anime, outdoor activities, and other genres. HUYA offers a comprehensive content library including user-generated content (UGC), professional-user-generated content (PUGC), and professionally-generated content (PGC).

In order to improve the user experience, HUYA also leverages big data and AI technology to analyze its users’ viewing preferences and make more accurate content recommendations.

Viewers come to HUYA not only for its best-in-class live streaming contents generated by broadcasters, but also for a dynamic and interactive experience with broadcasters and other users. Beyond the real-time improvisation of broadcasters during live streaming, the real-time interactions between viewers and broadcasters or among viewers also creates user-generated content, which in turn becomes part of the overall entertainment and social experience on HUYA. Such content enhances the sense of involvement and makes it more fun to watch live streaming.

 

Value capture

Huya generates 95% of its revenue from sales of virtual gifts and items on its live streaming platform. Viewers purchase these items for their favorite broadcasters, who receive a cut of the revenue. 5% of HUYA’s revenue comes from digital ads.

HUYA users can purchase various virtual items offered by HUYA including consumable virtual items and time-based virtual items. Consumable virtual items mainly serve as gifts to broadcasters. Special visual effects, such as thumbs-up, planes, or treasure boxes, on the screen will be generated during live streaming when these gifts are sent to broadcasters. Time-based virtual items are mostly visual social status for the users, e.g., membership with the designation of Noble Members that everyone can see during a live stream. Broadcasters and talent agencies may share a percentage of the revenues generated from the sales of virtual items attributed to his/her live streams. As of January 2019, the most popular host on Huya had over 480,000 fans and the highest total value of the gift he received from his fans in one single stream was over RMB$1 million.

HUYA earns advertising revenue by offering customized ads aimed at targeted demographics. The majority of advertising revenue is derived from advertisers in the games industry, e.g., game developers, publishers, and e-sports organizers. Display advertisements fees are generally determined on the basis of the cost per thousand views or cost per day.

 

Scalability and Sustainablity

HUYA has formed its sweet spot as a fast-growing profitable vertical platform. Its unique broadcaster-user social experience and high-quality content has differentiated HUYA from other live streaming platforms. Up to date, HUYA has been successfully growing both user base and revenue. Its business model is both scalable and sustainable.

However, there is fierce competition from DouYu, the other leading game live stream platform, as well as potential threat from short-video social media, such as TikTok and KuaiShou in China.

Previous:

Caviar – Food delivery’s race to your doorstep

Next:

Letgo: Grabbing Hold of the Classifieds Market and Not Letting Go

1 thought on “HUYA – the Amazon’s Twitch of China

  1. Very interesting post. Super intrigued by the concept of virtual gifts as being the main source. Wondering if any of the large player such as Ali Baba, Baidu or Tencent have plans of entering the video streaming space, as a push from either of them could be an existential threat for Huya. I still feel that virtual gifts may not be the most sustainable revenue source, as one may not be compelled to give again once they have already done so.

Leave a comment