Undoubtedly, live game streaming was once a "money-making machine" industry.

With the strong entry of Douyin, the public's understanding of "live streaming" is constantly being rewritten. Live game streaming is gradually declining, while live shopping is rising, causing traditional live streaming platforms like Huya and Douyu to see declining profitability.

Amid the "winter" of live game streaming, Huya and Douyu are struggling to find their own paths forward.

Recently, Huya announced its Q2 2024 financial report. Data shows that during the reporting period, Huya's total revenue reached 1.542 billion yuan. Among them, revenue from game-related services, advertising, and other businesses surged to 310 million yuan, a year-on-year increase of 152.7%, accounting for a larger share of overall revenue.

Furthermore, under non-GAAP accounting standards, Huya's net profit was 97 million yuan, and its mobile MAU (monthly active users) increased to 83.5 million.

Influenced by the positive financial report, Huya's share price surged. On August 13, Huya's share price jumped 14.13%, closing at $5.09 per share.

However, judging from revenue data, Huya has still failed to stem its decline. In this context, its generous dividend move raises questions: Could this be Tencent's "farewell feast" before privatizing Huya?

Has Huya, which is transforming through various measures, truly found its second growth curve?

1. Revenue decline, urgent need to solve the problem of a single profit structure

Huya's profitability is actually quite unstable.

Financial report data shows that in Q2 2024, Huya achieved revenue of 1.542 billion yuan, a 16.1% decrease from the same period last year. This is Huya's 11th consecutive quarter of revenue decline.

Starting in Q1 2024, Huya reorganized its revenue structure, adjusting advertising and other business segments into game-related services, advertising, and other revenues.

Looking solely at the Q2 financial report, since Huya went public in May 2018, its Q2 2024 revenue was only higher than that of Q2 2018, which was 1.038 billion yuan. The Q2 financial reports disclosed from 2019 to 2023 showed revenues of 2.01 billion yuan, 2.697 billion yuan, 2.962 billion yuan, 2.275 billion yuan, and 1.821 billion yuan, respectively.

The latest financial report data shows that Huya's main revenue still comes from live streaming. In Q2 2024, live streaming contributed 1.233 billion yuan to Huya's revenue, accounting for nearly 80% of total revenue, compared to 1.716 billion yuan in the same period last year, a decrease of 28.1%.

Although Huya explained that this was due to macroeconomic and industry factors, the company proactively adjusted its business to support strategic transformation and prudent operations.

Ultimately, Huya has struggled to escape its single profit model.

In fact, for the live game streaming industry, its heavy reliance on tipping has led to a single revenue model, which has caused the industry's growth to stagnate, becoming a long-standing problem in the industry.

Huya emerged from the early YY live streaming platform, quickly becoming a leader in the industry and inheriting its mature business model of live streaming tipping.

Previously, Huya's former CEO Dong Rongjie stated in a public speech that while live streaming seems to have various categories, only two types of live streaming products have proven successful and passed market tests: games and entertainment. Therefore, Huya focused on both games and entertainment.

However, the market is not static. Despite Huya's product upgrades and innovative e-sports activities in early 2024, user willingness to pay and activity levels remained low.

Financial report data shows that in Q2 2024, Huya's average mobile MAU increased to 83.5 million, compared to 82.9 million in the same period in 2023. In Q1 2024, Huya had 4.4 million paying users, a decrease of 800,000 from the same period last year.

While Huya's monthly active users appear to be increasing, its user engagement is not high.

Sina Tech statistics show that as of the end of 2020, Huya's mobile MAU was 76 million, 80.9 million in 2021, 84.3 million in 2022, and 84.1 million in 2023. Clearly, Huya's user growth is limited and trending towards saturation.

Platforms like Kuaishou and Bilibili, which have vigorously developed their gaming businesses, have far more monthly active users than Huya. As of Q3 2023, Bilibili and Kuaishou had MAUs of 341 million and 685 million, respectively. Such a large user base puts significant pressure on Huya's gaming business.

Furthermore, in Q2 2024, revenue from game-related services, advertising, and other businesses accounted for 20% of Huya's total revenue, still unable to shoulder the burden of revenue generation.

It is clear that despite Huya's strategic adjustments in corporate strategy and internal operations, it still struggles with a single profit model due to the loss of major streamers and technological competition from peers.

2. Acquired by Tencent, yet still not a trusted ally

In China's gaming industry, Tencent, with its multiple hit games, has always been the leader, with an unshakeable position.

To gain more influence, Tencent has not only focused on the gaming sector but also explored and strategically positioned itself in emerging social platforms like short videos and live streaming.

However, despite Tencent's eagerness, it failed to nurture a powerful live streaming product and ultimately resorted to acquisition, investing in game live streaming giants.

In March 2018, Tencent acquired a 34.6% stake in Huya for $460 million, becoming the second-largest shareholder after JOYY Inc.

At the time, Tencent also secured the right to purchase additional Huya shares from March 8, 2020, to March 8, 2021, to reach a 50.1% voting interest in Huya.

In April 2020, Tencent exercised this right and invested an additional $263 million to become Huya's largest shareholder.

However, while Tencent acquired Huya, it did not fully commit its attention to it.

Earlier, Tencent had led B and C round financing for Douyu, becoming one of its shareholders.

With Huya and Douyu under its belt, Tencent's gaming content ecosystem became more comprehensive. Through a series of e-sports events and promotions by game streamers like Feng Timo and Zhang Daxian, games like "League of Legends," "Honor of Kings," and "Dungeon & Fighter" gained widespread popularity, greatly benefiting Tencent Video.

Huya was eager to join Tencent's ecosystem for support. Huya's former CEO Dong Rongjie once disclosed that Tencent's position in the gaming industry is deeply entrenched, and partnering with it would not only optimize Huya's game live streaming business but also promote the development of the gaming industry.

However, in recent years, the relationship between Huya and Tencent has become less solid.

As Douyin rose rapidly, Tencent's stance towards it softened significantly. Not only did it slow down its legal actions against Douyin, but it even deepened cooperation. This has gradually weakened Huya's once-advantageous game licensing.

Even more concerning for Huya is the uncertainty of how long Tencent will continue to support it.

3. Actively transforming to emerge from the trough

Nonetheless, the gaming industry is now in a recovery phase, presenting development opportunities for Huya.

According to the "China Game Industry Report 2024 (January-June)," from January to June this year, the actual sales revenue of the domestic game market reached 147.267 billion yuan, a year-on-year increase of 2.08%. The number of domestic game users in the first half of the year was nearly 674 million, a year-on-year increase of 0.88%.

Furthermore, iResearch predicts that China's e-sports industry will reach a market size of 197.5 billion yuan by 2025, with a compound annual growth rate of 7.2% from 2023 to 2025.

These data indicate that China's live game streaming industry still has room for growth. Huya has keenly perceived this potential and is actively reforming.

Since formulating its "three-year plan" in August last year, Huya has focused on commercial transformation and deepened cooperation with game companies to increase revenue from item sales, game advertising, and distribution services.

First, in game distribution, Huya expanded its coverage of evergreen games, promoting user retention and participating in the promotion and distribution of newly launched games.

Second, for game advertising, Huya not only uses conventional placements but also introduces interactive self-produced variety shows, combining game promotions with entertainment content through planned themed episodes.

Furthermore, Huya is not only actively creating self-produced events but also striving to cover more top-tier events. In Q2 2024 alone, Huya live streamed over 80 licensed e-sports events.

However, as Huya actively pursues its second growth curve, it has faced consumer complaints due to inadequate supervision.

According to the third-party platform Heimao Complaints, as of August 20, 2024, there were 4,072 complaints related to Huya, mainly concerning fraud, unauthorized Huya coin deductions, and false lottery odds.

While Huya's response and resolution rates are not low, such a high volume of complaints can still easily damage its reputation. If consumers lose trust in the platform and are unwilling to make in-app purchases, Huya itself will suffer.

Compared to Douyu, Huya is currently in a more stable position, with its transformation strategy initiated last year showing initial results, laying a positive foundation for the company's future development. Whether Huya can reach new heights and independently showcase a unique industry presence is a process that requires time to verify and refine.