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Live-Streaming Industry Has Plenty of Room to Grow: Huya CEO

May 27, 2018 by The Passage Team
Live-Streaming Industry Has Plenty of Room to Grow: Huya CEO

Ten days after Huya’s initial public offering (IPO) in the New York Stock Exchange (NYSE), shares of the Chinese game-streaming platform soared over 34 percent, outshining most of the others in a waning stock market.

Huya’s post-IPO rally seems to be echoing what Dong Rongjie, the company’s CEO, said in a recent interview with the Passage – that the game-streaming business mode has won the widespread recognition of institutional investors and he believed that the whole live-streaming industry has a lot of room to grow in the future.

Huya, trading under the ticker symbol of "HUYA", priced its IPO of 15,000,000 American depositary shares (ADSs), at 12.00 U.S. dollars per ADS for a total offering size of approximately 180 million dollars.

The Guangzhou-based company started trading at 15.50 dollars per share on May 11, climbing 29.17 percent from its pricing, and was traded around 20.72 dollars on May 24, surging another 34.13 percent ten sessions after.

On the day of the IPO, Dong talked with us about Huya’s future plans and the booming live-streaming industry in China.

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(Dong Rongjie, Huya CEO (R1) on the day of IPO, credited by NYSE)

Q: What does an IPO mean for Huya?

A: Huya’s IPO stands for a new development phase for the company. For one thing, as we are expanding overseas, an IPO could really help us to further promote our brand. For another, like many other internet start-ups, Huya has granted its core team stock options. If we don’t go public, the options will be worthless. Going public is a crucial way to encourage our core team to do a better job in the future.

Q: What do you think of Huya’s opening price? What is the money being raised for?

A: The opening price has beaten my expectations, which shows market recognition of the live-streaming industry. Generally, we plan to use the money to enhance collaborations with our partners upstream and downstream in the game-streaming and Esports industries. Besides, we are looking for investment opportunities in sectors other than game-streaming so as to generate new sources of growth for the company.

Q: What are the main concerns of U.S. investors during the pre-IPO roadshows? Do they understand the business mode of game-streaming?

A: They completely understand game-streaming since Esports are gaining popularity in the United States. U.S. investors were concerned whether Huya could sustain its current profitability, which depends mostly on viewers buying virtual gifts for broadcasters.

Q: What are your answers for such concerns?

A: We believe that game-streaming represents the trend of the gaming industry. Many of the RPG (Role-playing Game) companies are creating team-based competitive Esports games. The reasons are as follows: 1. As the visualization technology advances and costs of bandwidth drop, online games are increasingly suitable for live-streaming; 2. For some old games, the share of viewers is climbing steadily compared with players; 3. Many of the players of the most popular games including Werewolf or Playerunknown's Battlegrounds first got to know the games by watching others playing via game-streaming platforms. It shows that more and more people are familiar with the mode of game-streaming.

Q: Why are game-streaming platforms like Huya so popular in China?

A: A very important reason is that the gaming industry is experiencing an explosive growth in China. There are a billion mobile phone users in China, 580 million of which are mobile game players. For the first time in history, mobile game users have become the majority. It is safe to say that firstly the rapid growth of game users provided a solid base for the game-streaming industry; secondly, with the development of Esports and technology, it has become a joy to watch others play; thirdly, today’s young people have so many options in terms of entertainments, that it is more and more difficult to become really proficient in playing a game, thus people tend to choose to watch others play on a game-streaming platform.

Q: What are the competitive advantages of Huya in the live-streaming industry?

A: Firstly, we can see that the industry has been undergoing an integration in recent years. Two or three years ago, there existed dozens of live-streaming platforms, but now there are only four or five left. We believe the trend of consolidation will continue.

Secondly, the public listing of Huya represents a brand-new stage of the industry. Huya started to make profits in the fourth quarter last year, which means that the live-streaming industry is transforming from a money-burning industry to a profitable one. This also means if a live-streaming platform can’t make money instantly, it could be eliminated from the contest.

Thirdly, we believe a game-streaming platform could sustain in the competition, not only because it spends huge amounts of money to buy popular content and attract star broadcasters, but also because it can nurture new content and broadcasters. Apart from retaining our current broadcasters, Huya is aiming to build an environment which would encourage new content and broadcasters to enter the field.

Q: What is the long term strategy for Huya?

A: First and foremost, we want to win over the game-streaming market, including the overseas market. Last week, Huya launched its own game-streaming platform for Southeast Asia market. We hope to be No. 1 both in China and Southeast Asia. After this, we would like to try to expand in Europe and North America. We are exploring whether there exists a second live-streaming mode other than game-streaming that could win the same amount of popularity among viewers. There are a lot of new things we are trying, including ACGN (Anime, Comic, Games and Novels) subculture live-streaming, outdoor live-streaming or cooking live-streaming, all of which are at an early phase.

Q: Why is live-streaming so popular in China today?

A: It provides a real-time interactive video platform. I believe video is the future. With ways of interpersonal communications evolving from written words, pictures, audio to videos, the density of information has improved accordingly. Videos are among the newest and most advanced forms of communication. Secondly, young people crave for short-distance, real-time contact with what is happening in the world. Unlike videos, which can be edited and rearranged, live-streaming is unpolished, which is also attractive to the youngsters.

Q: What are the trends we will see in the live-streaming industry in the coming years?

A: Live-streaming is not just about game-streaming or live fashion shows; we can see emerging modes like e-commerce live streaming or education live streaming. Take VIPKid for example, you can define it as the English education live-streaming for children. I believe live-streaming is an advanced business mode and meets the needs of young people today. There is much room for imagination.

Q: Does the live-streaming industry need regulation? What measures do you suggest the regulators and companies take in terms of regulation?

A: Live-streaming industry deals with viewers directly and continues to attract an increasing number of users. As a company, we welcome the government to regulate the industry in some way in the beginning, which is better than shutting the whole industry down when real problems emerge later. We sincerely welcome the guidelines of government regulatory departments. We have always worked closely with authorities to cope with different issues, so I believe we won’t have a problem regarding this matter.

Li Ming is a Chinese reporter based in New York. In the past four years, she has been covering the IT industry, financial market and Chinese companies listed in the United States. You may reach her via yiaoyou@gmail.com

The Passage Team

The Passage is committed to creating in-depth content over technology industry across Asia with a focus on emerging startups in the technology, healthcare, education, food, tech, travel & mobility segments.

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