08/16 2024 566
Produced by | Bullet Finance
Designed by | Qianqian
Edited by | Songwen
On the evening of August 13, Beijing time, Huya Inc. (NYSE: HUYA) announced its financial results for the second quarter of 2024. During the reporting period, Huya's total revenue increased quarter-on-quarter to RMB 1.54 billion. Notably, revenue from game-related services, advertising, and other businesses surged 152.7% year-on-year to RMB 310 million. Under Non-GAAP, Huya's net profit attributable to the company was RMB 97 million.
With a robust second-quarter performance, Huya continued to reward its shareholders. After comprehensively considering the company's financial position, business plans, capital requirements, and fund conditions, the board of directors approved a special cash dividend of approximately US$250 million to shareholders.
Huya's share price surged during the U.S. trading session, reaching an intraday gain of up to 20.52% to US$5.39 per share.
This underscores that Huya's "Three-Year Plan" strategic transformation, initiated in 2023, has met market expectations.
1. Breaking industry barriers: A comprehensive upgrade of Huya's platform ecosystem
As a professional game live streaming company, Huya is highly sensitive to trends in the gaming industry. Users today have more diverse and personalized demands for game live streaming, seeking not just to watch but also to participate through multiple channels and formats.
For Huya, breaking industry barriers and offering more diverse game live streaming services presents both challenges and opportunities.
This transformation has been in the works for some time. In April this year, some Huya streamers began appearing on Douyin and Kuaishou. Earlier, Huya also collaborated with other live streaming platforms to push its streamers into the public domain.
During the reporting period, Huya continued to strengthen cooperation with various content platforms and products, aiming to enhance its platform ecosystem and reach a wider audience. This included initiatives such as collaborative content creation, cross-platform streaming, and joint commercialization. For example, in April, Huya announced the 2024 League of Legends LGC Legends Cup, which was open to streamers from platforms like Bilibili and Douyin.
This approach disrupts the traditional siloed model, where game live streaming platforms would typically limit their self-produced events within their own platforms. Achieving cross-platform collaboration requires breaking through various restrictions and ensuring comprehensive coordination among platforms, which can be challenging. However, Huya has successfully done so, demonstrating the benefits of breaking industry barriers and enabling cross-platform collaboration: Users enjoy a richer selection of events, while esports players, streamers, and celebrities gain greater exposure and popularity. For platforms, sharing resources to create more professional events enhances their appeal and collectively drives high-quality development in the game live streaming industry.
Apart from cross-platform collaboration, Huya's product and technology upgrades have also contributed significantly to the new viewing experience. The Huya Live app introduced several unique features for the Legends Cup, including a dedicated discussion area for the event, aggregating event highlights, player updates, short videos, and official news. For the live broadcast, Huya experimented with cutting-edge features, such as a voice subtitle live room that uses precise ASR (Automatic Speech Recognition) technology and an esports vocabulary database to convert players' voice communication into text in real-time, enhancing the viewing experience for audiences.
All these efforts led to the widespread success of Huya's Legends Cup in June, earning praise from both within and outside the industry.
Notably, Tencent has provided significant support to Huya. Public information reveals a deep partnership between Huya and Tencent, including strategic cooperation in game live streaming. This collaboration enables Huya to leverage Tencent's support in game content and technology, further consolidating its industry-leading position.
Through these extensive and deep connections, Huya's ecosystem has continued to upgrade and expand, resulting in growth and improved performance reflected in the financial report.
Huang Junhong, Huya's Co-CEO and Senior Vice President, elaborated on the company's ecosystem upgrades: "As a pioneer in breaking industry barriers, we believe that in a more open content ecosystem, Huya can further expand its platform influence. We have already begun selectively distributing live streaming and video content to other platforms and Tencent's various product lines. In June, Huya's content ecosystem reached approximately 120 million mobile users, which we believe will facilitate more commercial opportunities in the future."
2. Game business growth exceeds expectations, strategic transformation continues to deepen
Born and grown in the gaming industry, Huya's fate is closely tied to that of the gaming sector. Since last year, growth in the mobile gaming market, the increasing popularity of esports events, government support for the digital entertainment industry, and a clearer regulatory framework have all positively impacted the game live streaming industry.
Against this backdrop, Huya's strategic upgrade following a change in leadership in 2023 showcased its potential in the industry. This transformation became more evident in the second quarter of this year.
Financial report data indicates that Huya's revenue from game-related services, advertising, and other businesses increased by 152.7% year-on-year and 26.6% quarter-on-quarter to approximately RMB 310 million in Q2 2024.
The game live streaming industry revolves around content provision, distribution, and viewing, with live streaming platforms serving as the primary content distributors, connecting game content with users. Revenue streams in this industry also stem from these three pillars.
Game distribution, as a core business, is crucial to the development of the entire game live streaming industry.
During the reporting period, Huya's strategy in game distribution focused on expanding coverage of evergreen games and promoting user retention through gameplay and marketing innovations. Taking the promotion and distribution of the newly launched Dungeon & Fighter: Origin (DNF Mobile) in Q2 as an example, Huya's Game Center set up a dedicated reservation and download section and game news area for the game, supported by special programs, exclusive items, and gifts. Huya also launched a streamer recruitment campaign, further boosting the game's popularity on its platform. As a result, the mobile game not only ranked highly in live viewing metrics among new games launched this year but also exceeded expectations in distribution.
In terms of item sales, Huya launched item sales for games like League of Legends, League of Legends: Wild Rift, and VALORANT in Q2, innovatively combining item sales with corresponding events to fully exploit the rich esports content these games offer.
Finally, in game advertising, apart from preparing promotions for multiple new games launched during the summer, Huya recently introduced an interactive game show, "Game On!", which combines game promotion with entertainment content under different game themes in each episode. This program has not only gained popularity among Huya users but also effectively attracted active players to the featured games.
Moreover, Huya's game-related services have generated new revenue streams for its streamers, contributing to revenue growth. It is revealed that thousands of streamers on the platform have earned income through game distribution and item sales in the first half of this year.
Thus, by focusing on key aspects of its strategic transformation, Huya has achieved significant breakthroughs and growth in revenue.
3. Strengthening the pyramid-shaped esports content strategy for future growth
Currently, different users have varying demands for game live streaming, such as loyal fans' high standards for professional esports events and casual users' preferences for event breadth, interactivity, and entertainment. This suggests that game live streaming platforms cannot adopt a one-size-fits-all content strategy but must tailor their offerings to individual users.
Huya's solution is a three-tier pyramid-shaped esports content strategy to broaden the audience for esports content.
In this strategy, the top tier comprises professional licensed esports events, the middle tier features self-produced content, and the base tier encompasses esports activities targeting the general public and lower-tier markets.
Essentially, this strategy meets the needs of gamers, content creators, and industry partners at all levels, bringing Huya closer to its goal of reaching a wider audience.
Naturally, a good strategy warrants sustained effort. In Q2 2024, Huya continued to advance its three-tier pyramid-shaped esports content strategy and achieved remarkable results.
Starting with the top tier, Huya broadcast over 80 licensed esports events. Among them, "League of Legends Pro League (LPL)", "King Pro League (KPL)", and "CrossFire Pro League (CFPL)" continued to garner popularity among seasoned gamers. Huya's focus is not limited to domestic events; it has also made breakthroughs in international esports content supply. Since July, Huya has broadcast the inaugural "eSports World Cup" in Saudi Arabia, enriching its high-quality esports content library.
Next, the middle tier comprises self-produced events and entertainment programs. During the reporting period, over 20 self-produced events and programs were launched. Notably, apart from "League of Legends Legends Cup" and "Game On!", Huya co-organized the inaugural "Thunder Honor Cup" for "Honor of Kings" with another game live streaming platform. This event garnered enthusiastic responses by bringing together professional KPL teams and deepened Huya's collaboration with industry platforms in co-creating professional content.
At the base tier, Huya frequently broke through traditional boundaries. During events like the "2024 Huya Honor of Kings Guangxi Rural Esports Games - Nanning Station" and "2024 Huya Village Games x Game for Peace - Shandong Station", Huya not only brought top-tier esports events to local communities but also integrated local cultural elements such as traditional costumes and food culture into the events, offering audiences a unique esports cultural feast.
Huya's breakthroughs in content ecosystem development are evident.
4. Conclusion
"While maintaining our core competitiveness in game live streaming, we will drive the growth of game-related services and expand Huya's influence in the gaming industry value chain through content and platform ecosystem upgrades, technological and product innovations," said Huang Junhong during the quarterly earnings call, expressing his expectations for the company based on Huya's second-quarter performance and recent developments.