eSports

DouYu-Huya Merger Faces Investigation by Chinese Regulators, 37 Interactive Entertainment Invests in All Gamers

Last week was a milestone in the history of esports – for the first time, esports has been approved by the Olympic Council of Asia (OCA) as a medaled sport in the 2022 Asian Games in Hangzhou, China. In addition, China’s esports industry also saw a multi-million dollar investment by a game publisher to an esports organization. 

As we reported in our last China Recap, the LPL All-Star event was postponed due to Chengdu COVID-19 concerns, and all bars and nightclubs in the central city have continually closed. On Dec. 11, the Chongqing government reported one asymptomatic COVID-19 carrier in the city. VSPN, who will host the King Pro League Fall Split Final in Chongqing, has increased its safety measures for this event, requiring that all live audience members and staff should have a negative COVID-19 test results. 

Among the top stories in China’s esports industry: The DouYu and Huya merge is facing an investigation by Chinese authorities; 37 Interactive Entertainment invested millions of dollars in Chengdu-based esports organization All Gamers; the Olympic Council of Asia revealed that six esports titles will be added in the 19th Asian Games in Hangzhou; and China announced a “rating classification standard” by age groups for all games published in the country. 

DouYu-Huya Merger Being Reviewed by China Under  Anti-Monopoly Rules 

On Dec. 14, China’s State Administration for Market Regulation (SAMR) announced that the government has started to investigate the merger between DouYu and Huya, which focuses on the concentration of undertakings in Variable Interest Entity (VIE). To simplify it, it is an anti-monopoly investigation. 

The investigation follows the new reformation of China’s antitrust law since January of this year, adding new restrictions for high technology and internet companies. On the same day, SAMR punished Alibaba Group, Tencent’s China Literature division, and one of the biggest logistics companies Hive Box was issued a strong public written warning, respectively, as well as a ¥500K ($76.5K USD) fine for each, for violating China’s antitrust law. 

Later that day, Huya responded to Chinese outlets that the company would cooperate with authorities, and was willing to report relevant materials to SAMR.

The merger between DouYu and Huya has been pushed by the Tencent Holdings since October. Both companies are expecting to complete the merger in H1 2021. Meanwhile, DouYu will also acquire Tencent’s Penguin Esports for $500M

With Tencent merging DouYu, Huya, and Penguin Esports,  it will become a market leader and have strong advantages in the gaming live streaming segment. However, the Chinese live-streaming industry also includes other segments such as short-form video, just chatting, music, and e-commerce. In this scenario, Tencent is not a monopolist, it has competition from ByteDance’s Douyin, Bilibili, and Kuaishou, as well as multiple e-commerce platforms, such as Pinduoduo, Taobao, etc. 

The Esports Observer will continue to monitor this situation. 

37 Interactive Entertainment Invests Million of Dollars in Chengdu-Based All Gamers 

On Dec.16, game company 37 Interactive Entertainment (37) and esports organization All Gamers (AG) hosted an investment signing ceremony in Guangzhou. 37 chairman Yifei Li signed a multi-million dollar strategic investment deal with AG chairman Kedeng Le. 

Financial details were not disclosed. 

According to the announcement by 37, the investment is the company’s first move in the esports industry, and it will have deep corporation with AG in esports game design, team building, and sponsorship. 37 has invested in multiple Chinese game publishers, such as Zengame Technology, Tap Tap, and Karma Game. 

Chengdu-based esports organization AG was founded in 2009, and raised an undisclosed million of dollar series A funding round in August, led by Shanghai Real Power Capital. The organization competes in Honor of Kings, Peacekeeper Elite, and CrossFire, and owns franchise slots in King Pro League (KPL), Peace Elite League (PEL), and CrossFire Professional League (CFPL).

On Saturday, AG will compete with another Chinese Honor of Kings team DYG at the KPL Fall Split Final in Chongqing. This could be China’s last large-scale offline esports event in 2020. 

The 19th Hangzhou Asian Games Will Feature Six Esports Titles 

On Dec.17, during the 39th General Assembly of OCA, esports was approved to join the 19th annual Asian Games 2022 in Hangzhou, China, Sept. 10-25, as a medaled sport for the first time. 

The proposal was submitted by the Hangzhou Asian Games Organizing Committee. Despite the fact that official game titles to be played during the event have not been disclosed, the proposal revealed that there will be six esports titles, according to an image of the meeting, which was posted by the Chinese outlet People Esports. 

At the 2018 Asian Games held in Jakarta, there were also six games included as demonstration titles, including League of Legends, Arena of Valor, Pro Evolution Soccer 2018, StarCraft II, Hearthstone, and Clash Royale.

Hangzhou is considered one of the fast-growing esports cities in China. The city established China’s first esports town with esports organization LGD Gaming making it its League of Legends Pro League (LPL) home venue and headquarters. Bilibili’s Overwatch franchise team Hangzhou Spark and Bilibili Esports also established headquarters in Hangzhou Future Science Town. 

Other Esports Business News: 

  • On Dec. 16, Tencent, NetEase, and state-run publication People.cn jointly issued a “rating classification standard” by age groups for all games as published in China. There are three levels: Green represents eight-year-old and older (8+); Blue represents the upper 12-year-old (12+); and yellow represents the upper 16-year-old (16+). All three ratings categories will be displayed on official websites, logins, promotions, advertisements, and payments. 
  • On Dec. 16, Chinese esports organization FunPlus Phoenix posted a commercial on Chinese social media Weibo, featuring its League of Legends player Kim “Doinb” Tae-sang, and Lenovo Legion’s gaming laptop. Lenovo Legion is FPX’s official sponsor. 


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