Tencent Holdings, China’s largest video game and social media company, is pushing to merge Douyu and Huya, similar to Twitch’s game streaming platforms, in an effort to consolidate its dominance in the industry.

Four sources familiar with the situation told Reuters that Tencent is already Huya’s largest shareholder and owns a third of Douyu’s shares. The company has been trading for several months.

The source added that Tencent is trying to control or at least become the largest shareholder of the combined entity. Huya and Douyu are the most popular video game streaming sites in China, ranking first and second respectively. Users flock to watch e-sports matches and follow professional players.

A source said that Tencent is gradually promoting the merger of some businesses between Huya and Douyu.

Both Huya and DouYu are listed in the United States, with a total market value of US$10 billion (approximately Rs 74,834 crore). After Tencent exercised its option to acquire additional shares, it became Huya’s largest shareholder, which became a major obstacle to the merger.

According to data from MobTech, merging these two companies together will have a combined market share of over 80% in the country, which will reduce costs and ease the fierce competition between them.

The two have been in fierce competition. They saw signing fees and tens of millions of dollars in contracts to sign ribbons.

The deal will also help Tencent defend against emerging challengers like ByteDance, the owner of TikTok, which is developing multiple mature games at the same time.

One of the sources said that the merger may also involve Tencent’s own streaming media site eGame, which ranks fourth in China. According to sources, the merger is still in its early stages, and the merger was first reported by the domestic media “Beijing News” in June.

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© Thomson Reuters 2020

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