Nearly 30% of its revenue comes from non-live streaming businesses, Huya has truly found a 'new world'.

Recently, Huya released its third-quarter 2024 financial report. During the reporting period, under US GAAP, Huya achieved revenue of RMB 1.54 billion, gross profit of RMB 204 million, and net profit attributable to shareholders of RMB 23.6 million, an increase of 124.0% year-on-year.

Among them, Huya's primary growth driver in this quarter continues to come from non-live streaming revenue segments.

The corresponding revenue from game-related services, advertising, and other businesses increased by 209.3% year-on-year to RMB 410 million, and its share of total revenue has soared to 26.7%!

This once again confirms the correctness of Huya's 'Three-Year Plan' strategic transformation and releases more confidence to the capital market.

Therefore, after the financial report was released, Huang Junhong, Co-CEO and Senior Vice President of Huya, further stated during the conference call: To drive development, we will continue to solidify content and upgrade products to enhance the platform user experience; at the same time, explore new cooperative relationships and business opportunities to reach more users and unlock growth potential...

This also raises anticipation about how much value imagination Huya can demonstrate in the future as the game content ecosystem continues to improve and the platform ecosystem expands boundlessly.

Huya in the Third-Quarter Report

Evolving the Content Ecosystem, Bringing Commercial Monetization Closer

In August last year, Lin Songtao, the new chairman of Huya, proposed a 'Three-Year Plan' with the primary goal of promoting commercial transformation by providing more game-related services and optimizing the income structure of content creators to increase their income levels...

Since then, from August 2023 to April 2024, Huya Live's overall commercial revenue growth has been significant. Specifically, the sales revenue of props increased by 1800 times, game distribution revenue increased by 12 times, and game advertising revenue increased by 2 times.

The total proportion of corresponding game-related services and advertising revenue has also risen from 6.5% in the second quarter of last year to 16.2% in the first quarter of this year, 20% in the second quarter, and now nearly 30%. This growth performance is undoubtedly very impressive.

Reflecting this in the capital market, Huya's total market value has also increased significantly by nearly 20% since the beginning of the year.

So, after deciding to transform, why has Huya been able to do so well in its second growth curve business? What has it done right?

The core lies in two points: Strategically, Huya understands its strengths and positioning well; operationally, it is also very clear about the survival rules of internet platforms.

Let's start with the former. It must be acknowledged that under the impact of new traffic giants like Douyin and Kuaishou, Huya no longer holds much of an advantage in low-threshold entertainment live streaming.

Fortunately, game live streaming is Huya's absolute strength. Not only is its game live streaming platform image deeply rooted in people's minds, but it has also cultivated a large number of professional game anchors of various types, and this process of cultivating and signing anchors has basically matured.

In addition, in the first half of this year, Huya launched the 'Hu Billion Plan,' aiming to cultivate over a thousand top anchors across the industry in the next three years, leveraging over RMB 10 billion in platform-wide traffic to support the distribution of RMB 1 billion to game commercialization anchors.

In this scenario, it is almost impossible for either Douyin or Bilibili to surpass Huya in the game live streaming field in a short period. Games and anchor resources form Huya's strongest moat.

Now, let's look at the latter. What are the survival rules and principles of interest distribution for internet platforms?

In one sentence, traffic is king. This traffic includes not only the number of users but also user duration, user stickiness, willingness to pay, and more.

The core traffic entry for platforms like Huya is content. The larger the content traffic scale, the more commercial monetization opportunities Huya can obtain.

Therefore, in the third quarter of this year, Huya chose to continuously improve its professional content ecosystem and create self-produced event IPs.

For example, in terms of copyrighted content, during the reporting period, Huya broadcast over 90 copyrighted esports events, with 'League of Legends Pro League (LPL),' 'Honor of Kings Pro League (KPL),' 'Valorant Champions Tour,' and 'Esports World Cup' being the most watched events of the quarter.

Especially this year's 'Valorant Champions Tour,' viewership on the Huya platform increased by about 160% year-on-year, significantly boosting the popularity of this game content.

As for self-produced content, in the third quarter of this year, Huya brought over 20 self-produced events and entertainment programs. Among them, Huya also collaborated with two other live streaming platforms and game officials to bring users the exciting 'Honor of Kings Anchor League.'

In addition, Huya continued to promote its 'Village Games' series for the general public, hosting events like the '2024 Huya Rural Games - Quancun Rongyao, Zhejiang Putuo Liuheng Station' and the '2024 Huya Honor of Kings Rural Esports Games - Handan Daming Station, Hebei Province.'

Simultaneously, Huya partnered with well-known TV programs to launch the water obstacle course live variety show 'Anchors Go Forward,' featuring well-known Huya game and entertainment anchors. This not only conveyed the development concept of healthy esports to the public but also attracted the attention of a large number of new users.

The most direct proof is: In the first quarter of this year, Huya's mobile MAU (Monthly Active Users) was 82.6 million, rising to 83.5 million in the second quarter and further reaching 84 million in the third quarter; in terms of paying users, it was 4.4 million in the first quarter, 4.5 million in the second quarter, and 4.6 million in the third quarter.

This shows that Huya's user stickiness has reached a new level, continuously converting and attracting new users while retaining old ones, demonstrating the potential of its specialized content ecosystem.

Against this backdrop, Huya's commercial monetization has naturally been brought infinitely closer.

During the reporting period, Huya closely cooperated with game manufacturers on new game launches, version updates, and related operational activities, incentivizing anchors to participate in game distribution services. In practical terms, the total revenue from games distributed through Huya channels in the third quarter was over 20 times that of the same period last year, with popular games including 'Honor of Kings,' 'Dungeon Fighter Online: Origin,' and more.

Furthermore, Huya strengthened its cooperation with popular games in prop sales, expanding business coverage to include the launch of platform- and anchor-exclusive or customized game props and holding first-time launch events for game props. For instance, in this quarter, Huya exclusively launched a co-branded skin for a well-known anchor on its platform and sold it in the anchor's live room - it is reported that the total sales of this event exceeded RMB 50 million...

Obviously, with the right direction, Huya now deserves the industry's renewed expectations.

Breaking Platform Boundaries

Huya's Imagination Has Only Just Begun

'It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.'

Whenever there are significant changes in the internet ecosystem, the market recalls this quote from 'On the Origin of Species.'

In fact, if Huya had only achieved growth in its second-largest business segment by increasing its content ecosystem, it might not have been so exciting.

Surprisingly, Huya has now chosen to break platform boundaries and leverage the backdrop of interconnection to promote platform ecosystem upgrades.

Since the beginning of this year, Huya has successively cooperated with multiple content platforms in cross-platform live streaming and joint production of professional content, selectively distributing attractive game live streaming and video content from the Huya platform to the Tencent ecosystem and other content platforms.

For example, in the first quarter of this year, Huya, Douyu, Bilibili, Kuaishou, WeChat Video, and Tencent Video jointly hosted the 'Esports All-Star Spring Festival Games,' featuring three phenomenal games under Tencent: 'League of Legends,' 'Honor of Kings,' and 'Game for Peace.'

In April this year, Huya officially accessed Douyin and Kuaishou. Earlier, Huya had already cooperated with platforms like Douyu and Bilibili on traffic, pushing more Huya anchors into public traffic.

Additionally, at the 2024 League of Legends LGC Legendary Cup hosted by Huya, anchors from other platforms like Douyu, Bilibili, and Douyin could also participate...

Undoubtedly, compared to the past when platforms operated independently, Huya's current approach of breaking boundaries can be considered a disruptive innovation. And from the results, boundaryless cooperation has indeed achieved a win-win situation.

For users, the events they watch have become richer and more exciting; for esports players, anchors, and artists, exposure and popularity will also greatly increase; for platforms, they can create more professional events by sharing resources, enhancing platform attractiveness, and thereby promoting the development of the game live streaming industry.

Against this backdrop, in September this year, the total number of users reached by Huya's content ecosystem exceeded 140 million. Correspondingly, more commercial opportunities can be explored in game-related services and the live streaming field...

Of course, this is observable by most media, but actually, from a competitive perspective, it seems that Huya has kept a card up its sleeve.

To put it bluntly, for professional game content platforms like Huya, content distribution to pan-entertainment platforms is more one-way output. They can share platform resources and support each other's anchors, but pan-entertainment platforms with larger traffic volumes, limited by specialized game content, find it difficult to invade Huya's core fundamentals in return.

This may be the optimal solution for multi-party platform competition and development under interconnection...

But even so, why is it only Huya in the entire industry that dares to try breaking platform boundaries?

It is inseparable from the consistency in strategic thinking with its major shareholder Tencent.

Currently, what is Tencent doing? Externally, it allows its games to be live-streamed and advertised on other short video platforms, constantly breaking internet boundaries; internally, Tencent is also trying to achieve deeper integration of different products. For example, connecting game live streaming and advertising with video numbers to tap into more increments.

Essentially, Huya's current ecological thinking in cooperation with various parties is in sync with Tencent's development logic of 'connecting everything.'

With consistent strategic directions, both parties can exert stronger synergistic effects.

For example, Huya's high-quality content can be delivered to platforms within the Tencent ecosystem such as video numbers, Tencent Video, and QQ, enhancing the richness of Tencent's various product lines while obtaining more monetization channels. At the same time, Huya's content resources and anchor advantages accumulated in the game live streaming track can also help video numbers further expand the market, achieving perfect complementarity.

In addition, as a listed company controlled by Tencent, the strategic cooperative relationship between the two is inherently interdependent yet independent, with Huya's new senior management team mostly coming from Tencent, so the strategic binding between the two is expected to deepen in the future.

This is the new development core of Huya and the advantage of the new senior management team.

Conclusion: Overall, Huya is now using an open ecological mindset to explore the potential of game live streaming, strengthen the interconnection of various platform industry chains, and promote a win-win situation for anchors, users, game manufacturers, and others...

To some extent, Huya's move not only secures a more imaginative future for itself but also provides a new development model for the entire game live streaming industry.