For Huya, can selling game services become another good business outside of live streaming?
On the evening of May 13th, NYSE: HUYA released its Q1 2024 performance report.
During the reporting period, the company's revenue was approximately RMB 1.5 billion, a decrease of 23% compared to the same period last year of RMB 1.96 billion. Under GAAP, the quarterly net profit attributable to the company was approximately RMB 70 million, a significant increase of 79.3% year-on-year; Under non GAAP accounting standards, the net profit was approximately RMB 90 million, an increase of 8.7% year-on-year.
As of press release, Huya was trading at $4.74, up 7.13%.
Live streaming business encounters "off-season"
Specifically, Huya's current business is divided into two parts, namely live streaming and a series of other revenue related to gaming services, advertising, etc. Among them, the company's live streaming revenue in the first quarter was about 1.26 billion yuan, accounting for over 80% of the total revenue.
Compared to the same period last year, Huya's live streaming revenue decreased by 32.3%. The monthly active users remained basically unchanged, with an average of 82.6 million mobile monthly active users on Huya Live in the first quarter, compared to 82.1 million in the same period last year.
Huya explained in its first quarter report that the decline in live streaming revenue is partly due to the weak macroeconomic and industry environment, and partly due to the company's business adjustments for strategic transformation and prudent operation.
Increasing the construction efforts of game distribution, game prop sales, and other businesses is a part of Huya's strategic transformation by reducing its high dependence on a single live streaming business.
"We have made positive progress in commercializing game related services. More importantly, we have noticed that Huya's game related services have a higher gross profit margin, which has driven the overall profitability of the company." Huang Junhong, Co CEO and Senior Vice President of Huya, pointed out in this quarterly analyst conference call.
During the 2023 Q2 performance conference call with Huya, Huang Junhong also mentioned that as the company develops game related services, Huya will strive to improve the revenue structure of content creators, so that this group can receive revenue from game related services, including sales of game props, game distribution, and advertising.
Data shows that during the reporting period, Huya's game related services, advertising, and other revenue reached RMB 240 million, a year-on-year increase of 137.6% and a month on month increase of 30.7%. In addition, this part of the income accounts for 16.2% of the total income, which is higher than the 5.2% in the same period last year.
21st Century Business Herald reporter also learned from Huya Fang that the company is preparing for the upcoming Tencent mobile game "Dungeons and Warriors: Origins" (also known as "DNF Mobile Game") to seize opportunities in game distribution and promotion.
It is worth noting that Huya has also expanded its revenue through conscious cost control. The operating cost in the first quarter decreased from 1.69 billion yuan in the previous year to 1.28 billion yuan. In addition, the company's revenue sharing expenses and content costs decreased by 24.7%, while bandwidth costs decreased by 35.8%.
Regarding the highly concerned dividend issue from the outside world, Wu Xin, Co CEO and Vice President of Finance of Huya Company, also made an explanation in the financial report. She mentioned that as of March 31, 2024, the company had repurchased $48.5 million (approximately RMB 350 million) of Huya shares through a share buyback program, and announced in March this year that a special cash dividend of approximately $150 million would be distributed. "These measures are expected to return nearly $200 million to shareholders," she said.
Leveraging Tencent Genes
At present, there is no doubt that Tencent is the largest shareholder of Huya. Public data shows that Tencent directly holds 150386517 B-class ordinary shares of Huya, accounting for 66% of the issued ordinary shares.
As a live streaming platform with a strong "Tencent gene", Tencent's communication channels and game matrix are also natural resources that Huya can leverage.
Therefore, in terms of platform ecology, strengthening cooperation and linkage with various platforms and products, and upgrading the platform ecology have become one of the important strategies of Huya Company in 2024. In the first quarter of this year, Huya has hosted the "Esports All Star New Year Competition", using three popular esports games: League of Legends, Honor of Kings, and Peace Elite as carriers, and conducting deep cooperation with multiple platforms to achieve content sharing and complementarity.
In the first quarter of 2024, Huya also continued to update its copyrighted esports content. According to data disclosed by Huya, over 65 copyrighted esports events were broadcasted live in the quarter. Among them, the spring matches of leagues such as League of Legends (LPL), King of Glory (KPL), and CrossFire (CFPL) became the most watched esports events of the quarter.
Huya Fang also revealed to 21 reporters that in terms of content strategy, Huya is focusing on building a three-layer "pyramid shaped" content system for esports events.
Among them, Tajian is a professional copyright esports competition. The extensive coverage of copyright competitions not only showcases the high-quality content of the platform, but also helps to enhance one's own event operation capabilities. The waist is a self-made professional and entertainment event organized by Huya. By leveraging its advantages in the esports industry and abundant resources of anchors and professional players, Huya has brought more and more self-made content to users. Finally, Taki is a popular and niche esports event targeting the general public, which will further expand the audience of esports content.
As a live streaming platform, Huya is also trying to break down barriers between different platforms in order to further expand the boundaries and increment of live streaming business.
Huang Junhong stated that in addition to cooperating with similar live streaming platforms, Huya is currently actively embracing the field of short videos, introducing Huya's videos and live streaming content into short video platforms. "With the further strengthening of our cooperation with Tencent Group, high-quality content from Huya can be delivered to various product lines within the Tencent ecosystem, such as video accounts, Tencent Video, QQ, and multiple gaming products," he said.