Livestream Gamer DouYu Edges Ahead in Cost-cutting Battle

Livestream Gamer DouYu Edges Ahead in Cost-cutting Battle

Key Takeaways:

DouYua??s revenues fell by around 22% in the second quarter, but the company broke a six-season losing streak with an adjusted net profit of 23.50 million yuan

Huyaa??s revenue tumbled 23% in the same period, and it barely eked out an adjusted net profit after slashing costs

By Ken Lo

Chinaa??s gaming platforms, once locked in a fierce battle for dominance in a booming market, are now competing in the cost-cutting stakes as tighter regulation puts a dampener on the livestreaming industry.

Two gaming giants feeling the heat are long-time rivals DouYu International Holdings Ltd. (NASDAQ:DOYU) and Huya Inc. (NYSE:HUYA). Both are backed by internet titan Tencent (700.HK) and together the two platforms control more than 70% of Chinaa??s livestream gaming market.

The companies are now in the fight of their life, with business nosediving after the Chinese government tightened its oversight of the online gaming industry, introducing strict curbs on spending by young players. Neither platform escaped the wave of layoffs that swept the livestream gaming industry early this year. The word on the street is that both shed up to 30% of their staff. After dismal first-quarter earnings, both livestreaming platforms decided they needed to get to work on cutting costs.

We warned readers of the gloomy prospects for the companies in the second quarter in a previous article, but there might be a glimmer of light for investors as all the cost-controlling efforts start to show up in the firmsa?? earnings statements.
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