Hi there! Ashley here with your next IPO. This will be a fun one! It seems like a while back every single IPO that was coming out was from China, then we took a break. But now we have another Chinese company back on the radar! Let's talk about DouTu.
I'm just going to say it. I coin this year, the year of the Chinese Streaming company IPO's because DouYu is yet another one. DouYu is a streaming service focused on video games, and has been called by some the "Chinese Twitch". (We will touch on the other one later in this article.) It was started back in 2013 and has grown to 455 employees. Douyu TV's headquarters is located in Wuhan City, Hubei Province, in China.
According to Business Insider, the global video-game streaming market is predicted to grow by 27% a year between 2018 and 2026, according to Zion Market Research, surging from about $800 million in annual sales in 2017 to north of $6.9 billion. Let me say that again: video game streaming generates BILLIONS. Douyu differs from Twitch in that to tip gamers on the Chinese platform, followers purchase "virtual gifts" like "toy rockets to fish balls" (with cash) and from what I understand those gifts are exchanged for money by the streamers. DouYu takes a percentage of the streamers donations. I haven't found an exact amount but according to NewZoo.com, "Streamers take home around 30-40% of these donations, with platforms and streaming guilds receiving the rest." Fun fact as of last month, Douyu has 51 of the top 100 game live streamers, and eight of them are in the top 10. Apparently, companies like this came pay to poach these streamers off of other streaming platforms! Who knew that was a thing!?
Which brings us to our next topic: other streaming platforms! DouYu is one of two giants in China. The other is Huya. However, Douyu was the largest game-streaming platform by average total monthly active users (MAUs) on both mobile and PC during the fourth quarter of 2018. I have a feeling that these competitors will be in constant battles over the next couple of years. They spend much of their money on poaching contracts of streamers from each other, so I am interested to see which one takes a dominant spot. It is interesting to note though that the giant Tencent actually has large stakes in both of the companies. Not a surprise since a majority of Tencent's revenue comes from the gaming industry!
DouYu IPO'd on July 17, 2019 and is currently trading around the $9 mark. I personally won't be trading this one, as I don't truly understand DouYu fully (and I have other investments I would rather be in) but if you are a streaming lover and want to throw in a couple hundred bucks, you may find it totally worth it in a few years. Or not, I am really unsure about this one!