Tencent-Backed DouYu Required by Chinese Authorities to Rectify Issues of Pornography and Vulgarity
On May 8, the Cyberspace Administration of China (CAC) issued a statement stating that regarding serious ecological problems such as pornography and vulgarity on Chinese live streaming platform DouYu, the office guided the Hubei Provincial cyberspace administration to send a work group to conduct a one-month centralized rectification supervision on DouYu. As a result of this news, DouYu‘s US stocks plummeted before trading hours, down nearly 14%.
Public information shows that the platform involved, DouYu Live, is a gaming live streaming platform and live sharing website, belonging to Wuhan DouYu Network Technology Co., Ltd. The company was founded in 2015 by its founder Shaojie Chen. According to the 20-F document submitted by the firm on April 25 to the US SEC, as of March 31, 2022, Tencent holds a stake of 37.7%, while Shaojie Chen holds a stake of 17%.
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A big challenge that DouYu encountered in 2021 was the prohibition of its merger with Huya by China’s State Administration for Market Regulation (SAMR), which stated after review that it decided to prohibit this business concentration.
The SAMR believes that this concentration may have the effect of excluding or restricting competition in the market for game live streaming and online game operation services within Chinese mainland.
Due to the cooling down of the game live streaming industry and the impact of the pandemic, DouYu‘s performance has declined in the past two years.
The financial report released by DouYu on March 20 shows that its revenue for the years 2020, 2021, and 2022 were 9.6 billion yuan, 9.165 billion yuan, and 7.108 billion yuan ($1.03 billion), respectively. The gross profit was 1.56 billion yuan, 1.09 billion yuan, and 990 million yuan.
DouYu‘s net profits for 2020, 2021, and 2022 are 405 million yuan, -620 million yuan, and -90.4 million yuan, respectively. The adjusted profits are 542 million yuan, -440 million yuan, and -7.6 million yuan.
DouYu‘s net profit for the fourth quarter of 2022 was 41.8 million yuan, while in the same period of 2021 it had a net loss of 193.2 million yuan. Adjusted net loss, not following US GAAP standards (Non-GAAP), was 4.3 million yuan, compared to a net loss of 150.7 million yuan in the same period of 2021.
As of December 31, 2022, DouYu had cash and cash equivalents, restricted cash, short-term and long-term bank deposits totaling 6.8 billion yuan. As of December 31, 2021, the total was 6.6435 billion yuan.