HUYA Stock

HUYA Inc., through its subsidiaries, operates as a game live streaming platform in the People's Republic of China (PRC or China). The company is a subsidiary of Tencent Holding Limited (Tencent).

Leveraging the company's advantages as a pioneer and leader in the game live streaming market in China, the company has successfully emerged as one of the leading content-centric platforms with powerful content development capabilities.

The company's commitment to providing strong support and resources to broadcasters and talent agencies allows it to offer high-quality content from diversified sources. Through close cooperation with e-sports tournament and game event organizers, as well as major game developers and publishers, the company has developed e-sports live streaming as one of the most popular content genres on its platform. In addition to rich content in game and e-sports genres, the company offers non-game entertainment content, such as talent shows, anime, outdoor activities, live chats, and online theater. The average mobile MAUs of Huya Live in 2022 reached 84.3 million. Building on its success in China, the company has started its operations overseas since May 2018 mainly through Nimo TV, its game live streaming platform for overseas markets.

The company has created an engaged, interactive and immersive community for game enthusiasts of the young generation. With its rich and high-quality game live streaming content, the company has become a central hub with top-of-mind brand awareness for game lovers who share common interests to connect and share their passion on its platform. The company's users interact with one another with the support of its platform's wide array of attractive social functions, such as bullet chatting, real-time commenting and gifting. Such real-time interactions on the company's platform cultivate a strong sense of belonging, which effectively increases its user stickiness, forming a solid user base for the consumption of its other non-game content.

The company's open platform also functions as a marketplace for broadcasters and talent agencies to congregate and collaborate with it. The company's content is dynamic. Beyond the real-time improvisation of broadcasters during live streaming sessions, the real-time interactions between viewers and broadcasters or among viewers create user-generated content, which in turn becomes part of the overall entertainment and social experience offered on its platform. Such content enhances the sense of involvement and makes it more fun to watch live streaming.

The company's technology platform is designed for reliability, scalability and flexibility. Leveraging its strong technological capabilities in the fields of big data and artificial intelligence, or AI, live streaming, and infrastructure, the company delivers superior user experience and conduct operation in a highly efficient manner.

Users

The company's user base consists mainly of the young generation, who are generally more open-minded and tech-savvy, with an interest in games and other forms of entertainment. As it has gradually expanded and enriched its content offerings, the company has been able to expand its user base. The average mobile MAUs (any period refers to the sum of users who accessed the company's platform through its mobile apps at least once during such relevant period) of Huya Live in 2022 was 84.3 million.

Users may watch live streams on the company's platform without registration. However, only registered users can enjoy certain popular interactive social features, such as bullet chatting, messaging, following their favorite broadcasters, and purchase various services and products on the company's platform. Furthermore, registered users can purchase the company's Noble membership to enjoy additional premium status and features.

The real-time interactive features of the company's platform, coupled with a wide variety of high-quality content, has helped it create a vibrant online community that attracts and retains users. The company's bullet chatting, gifting, messaging and following functions encourage users to interact with broadcasters, as well as other users which also creates a sense of belonging within the community, thus further enhancing user engagement.

Some of the company's live streaming content are also available across various Tencent products, such as WeGame, WeChat Game Center, QQ Mobile Game Center, and League of Legends, etc. The average monthly active users who watched the company's live streaming content from those Tencent's products are not counted in its reported mobile monthly active users (MAUs) of Huya Live.

Content

The company offers comprehensive live streaming content with a primary focus on games. Game live streaming has been a key content offering of the company's platform since its inception. In response to users' growing interests, the company also encourages its broadcasters to create and share other entertainment content, which encompasses talent shows, anime, outdoor activities, live chats, online theater, and other genres. The company has leveraged big data and AI technology to analyze its users' viewing preferences and make more accurate content recommendations. The company's content library is constantly evolving and growing and enjoys an integration of user-generated content, professional-user-generated content and professionally-generated content. While broadcasters are the focal points of the live streams, the viewers themselves introduce additional meaning and context to the content when they express themselves to broadcasters or other viewers, thus creating a dynamic content.

In addition to live streaming content, the company cooperates with broadcasters, talent agencies and other video content creators to offer video content, such as gameplay videos, e-sports videos, and other videos, to cater for the increasing needs for diversified content of its users. Users and broadcasters can post a wide range of content in the company's game community section, such as images, text posts, and videos, as well as game Q&As, strategies and events. Official accounts operated by game studios and tournament organizers can provide information of game events and e-sports tournament in the community section.

Games

Live streaming of game content, such as gameplay, e-sports tournaments and game events, has attracted a large number of users on the company's platform. Leveraging its close relationship with game developers and publishers, as well as popular game broadcasters, e-sports leagues and players, the company is able to consistently offer high-quality and engaging game live streams to its users. The company actively tracks viewership growth and community feedback with respect to new game titles to identify trending games and allocate its broadcaster resources accordingly ahead of emerging surge in demand of such game content.

In 2022, the company's broadcasters had a total of 167.4 million streaming hours of game content on its platform. Among the game titles streamed on its platform, League of Legends, Honor of Kings, Crossfire and PeaceKeeper Elite, all being e-sports games, were among the most watched games in terms of total viewing time in 2022. The company closely cooperates with e-sports tournament and game event organizers, game developers and game publishers to identify trending e-sports competitions and secures live streaming rights of matches and tournaments favored by its community.

In 2022, the company adopted a stricter screening process for content procurement and production to increase the company's investment efficiency and to offer high-quality live streams of e-sports tournament and game events to the company's users. For example, under a license agreement entered into in April 2021 and amended in January 2023, the company acquired the exclusive broadcasting rights in mainland China for League of Legends Pro League from 2021 to 2022 and the non-exclusive broadcasting rights in mainland China for League of Legends Pro League and League of Legends World Championship from 2023 to 2025. In November 2021, the company reached an agreement with ESL Gaming and acquired the exclusive media rights in mainland China for ESL's Dota 2 and ESL Mobile ecosystems, as well as ESL Pro Tour for CS:GO and StarCraft® II from 2022 to 2023. Securing the broadcasting rights for these major e-sports tournaments further demonstrates the company's platform's brand value and influence in mainland China's e-sports industry. The company provided live streaming services for over approximately 270 third-party e-sports tournaments and game events in 2022, over some of which the company have also obtained exclusive broadcasting rights. The company also continued to proactively produce the company's self-organized e-sports tournaments and game events that further complement the viewing experiences of game enthusiasts. Huya Thunder Series, a tournament for Honor of Kings, Huya All-Star Cup, a Peacekeeper Elite tournament, and Huya CFM Championship Longteng Cup, a tournament for Crossfire Mobile are among the most popular self-produced e-sports tournaments and game events in 2022.

Other Entertainment Content

To accommodate the company's users' diverse interests, the company also offer a wide spectrum of other entertainment content, such as talent shows, anime, outdoor activities, live chats, and online theater. In 2022, the company's broadcasters had a total of 45.7 million streaming hours of such other entertainment content on the company's platform. The company will continue to diversify the company's content offerings to provide a one-stop live streaming entertainment platform for the company's users in order to enhance their stickiness and deepen their ongoing engagement.

Besides, the company also continued to offer the company's own original content produced in-house or in collaboration with quality third-party partners. In 2022, the company produced a number of popular shows such as Huya Kungfu Carnival, a mixed martial arts competition, and Heartbeat 72 Hours, a dating variety show.

In 2022, the company live streamed approximately 100 self-produced e-sports tournaments and game events, and entertainment shows.

Content Creators

The company has established deep cooperation with its broadcasters and talent agencies to deliver high-quality, fun and trendy live streaming content.

Broadcasters

The company encourages qualified users to join its community and live stream on its platform. The company's large broadcaster base consists of not only qualified professional gamers and artists who showcase their gaming skills and artistic talents, but also qualified amateurs who want to share fun and their life moments. Most of the company's broadcasters join it by proactively registering through its websites or apps. The company also conducts broadcaster recruitment through talent agencies.

The company manages, supports and promotes its broadcasters based on their respective level of popularity and quality of content. For the most popular broadcasters, the company cooperates with them and their talent agencies to develop individualized promotion strategies and helps them continue to generate top-quality content. The company also utilizes its data analytic capability to identify broadcasters that have shown great potential, based on ranking and popularity trends, and devote appropriate resources to them. Leveraging its strong data analytic capability and AI enabled technology, the company is able to recommend content generated by promising broadcasters to interested users, thus bringing increasing user traffic and improving their popularity. The company is also committed to nurturing and promoting its amateur broadcasters for the sustainable growth of its broadcaster community and the development of its diversified content. The company helps those amateur broadcasters improve their content quality, as well as their attractiveness on its platform by providing technical support and pairing them with talent agencies if necessary. The company also allows broadcasters to upload their recorded video clips to its platform, and it selectively records and edits live streaming gameplays of certain popular broadcasters and turn them into video clip highlights.

The company's effective management of broadcasters is also reflected in its ability to promptly attract and motivate broadcasters to live stream new popular games. When a new popular game is released, the company usually establishes a dedicated channel on its platform and is able to quickly attract and motivate many broadcasters to live stream this game title, and thus attracting user audience.

All broadcasters streaming on its platform need to enter into standard broadcaster agreements with the company. For certain popular or promising broadcasters, the company may also enter into customized cooperation agreements with them to facilitate closer collaboration. These customized cooperation agreements typically have a term ranging from one to five years and generally contain exclusivity clauses that require the contracted broadcasters to live stream exclusively on its platform during the contractual term. The company's broadcasters and their talent agencies generally are entitled to share a percentage of the proceeds generated from the sales of products and services attributed to their live streams. To certain popular broadcasters, the company also pays additional fees that are mostly associated with specific requirements, such as active days, content volume and popularity rankings. The company provides guidelines and continuously monitor to ensure the legitimacy of the live streams content of its broadcasters.

Talent Agencies

The scale and vibrancy of the company's platform and community have also attracted a large number of talent agencies to recruit, manage, train, support and promote its broadcasters. Talent agencies that cooperate with the company vary in size, ranging from associations of a couple of broadcasters to professional agency firms managing thousands of popular broadcasters.

The company generally manages its broadcasters through cooperation with talent agencies. Talent agencies are involved in every step of the broadcaster development process-from recruitment and live streaming training, to promotion strategies. The company provides guidance on content monitoring, compliance and corporate governance training to talent agencies to improve their management efficiency and quality and ensure their healthy development. The company also has a series of rules, guidelines and policies in place to regulate and manage talent agencies that cooperate with it. Talent agencies are required to provide ongoing compliance trainings to broadcasters under their management, as well as monitor and review relevant streams. Talent agency can join the company's platform by registering with it online. Certain talent agencies with the capacity to produce a large volume of high-quality content and manage a considerable pool of talent may be recognized as platinum talent agencies upon the company's thorough assessment of their qualifications and broadcaster portfolios. The company provides platinum talent agencies with additional resources to promote and develops their broadcasters.

Platform

The company's platform includes the company's mobile apps, websites, and PC clients through which users can access the company's content anywhere, anytime. Users could also access the company's content through YY Client, a PC client offered by JOYY, before the company ceased offering content through YY Client in early January 2021. The company offer a variety of features, tools and services to the company's users on the company's platform. Viewers primarily access the company's platform through the company's 'Huya Live' mobile app, including its associated mini programs and the app on smart TV and other smart devices, the company's website 'www.huya.com', or the company's PC clients. Broadcasters primarily live stream through the company's 'Huya Assistant' and 'Huya Mobile Game' mobile apps and the company's PC clients. The company's mobile apps are primarily available for download from Apple app store and various Android app stores of smart devices.

The company also expanded the company's platform to serve overseas users in 2018. In May 2018, the company launched Nimo TV that operates game live streaming in overseas markets. Users and broadcasters overseas primarily access the company's platform through the company's 'Nimo TV' mobile app or the company's websites 'www.nimo.tv'.

Features for Users

Through the company's platform, users can watch live streams and chat with their favorite broadcasters and other users anytime, anywhere. Features of the company's platform have been carefully designed to create a seamless viewing experience, an interactive environment, and a vibrant culture for its users. The basic features of the company's platform dedicated to users include watching and following, content exploring and recommendation, bullet chatting and messaging, and purchasing and gifting.

Watching and Following: Watching live streams is the main function of the company's platform. Video resolution and quality of live streams are adjusted automatically based on the users' internet connection quality. When watching a live stream, users may choose to follow a broadcaster through the company's following feature and receives notification in the future when the broadcaster starts streaming. Users are also able to share links to live streams on other social media platforms. For e-sport tournaments and game events content, the company also provides features, such as live event instant playback and video clip generation and sharing. Users may choose any specific time interval within a live event to replay, mark the event highlights and generate video clips from live streams to share on other social media platforms.

Content Exploring and Recommendation: The interfaces of the company's mobile apps, websites and PC clients are user-friendly and easy to navigate. Leveraging the company's AI technology and massive user data, it is able to generate a front page with individualized content recommendations matching the interest profile of each returning user. Users may also browse the company's content genres, or type in key words in the search bar displayed on its mobile apps, websites and PC clients interfaces to look for content that may interest them.

Bullet Chatting and Messaging: Fun and engaging interactions between the company's users and broadcasters are the cornerstone of its vibrant user community. Bullet chatting allows users to chat with broadcasters and other users through messages that glide across the screen like bullets while watching live streams. Bullet chats can be seen by all users who watch the same live stream, and therefore can stimulate interaction among users. Users can also communicate with other users or broadcasters through real-time commenting or in a private setting through the company's messaging feature.

Purchasing and Gifting: Users can make purchases on the company's platform to send virtual gifts to broadcasters, or to enjoy privileges and rights, or to receive other products or services. The company cooperates with payment platforms, such as WeChat Pay and AliPay in handling payments made on its platform.

Features for Broadcasters

The company provides handy tools for its broadcasters to create quality content. The company has designed a series of dedicated mobile apps and PC client for its broadcasters, enabling them to live stream anytime, anywhere. The basic broadcaster features of the company's platform include streaming and uploading, and analytical tools.

Streaming and Uploading: The company's mobile apps and PC client are compatible with built-in cameras on smart devices and professional high-resolution digital cameras. Broadcasters may live stream in studios with professional equipment, or simply share their life moments with their mobile phones at any location. The company's apps and PC client allow broadcasters to transmit multi-media content to its users real-time through its server. Broadcasters can add a variety of visual and audio effects to their live streams at their own choice. In addition, broadcasters and video content creators can leverage the company's video editing functions and upload the video clips on its platforms.

Analytical Tools: The company's mobile apps and PC client for broadcasters provide certain analytical data, such as statistics of viewer and follower numbers, comments and bullet chats. Such analytical data enable the company's broadcasters to monitor user reactions and feedbacks so as to improve their performance.

Monetization

At present, the company monetizes its user base mainly through live streaming services and advertising services. Revenues from live streaming services are primarily generated from the sales of products and services that the company's users purchase on its live streaming platform. The company shares revenues generated on its platform with broadcasters and talent agencies. Revenues from advertising services are primarily generated from advertisements placed on the company's live streaming platform. In addition, the company generates revenues from other monetization methods, including sub-licensing and online games.

Live Streaming

The company generates revenues from paying users of its live streaming platforms. The company's users can purchase various products and services offered by it, mainly, including consumable virtual items and time-based virtual items, or multiple virtual items sold in bundles. Broadcasters may be entitled to share a percentage of the proceeds generated from the sales of these products and services attributed to their live streams.

Consumable virtual items mainly serve as gifts to broadcasters. Special visual effects, such as thumbs-up, planes, or treasure boxes, on the screen will be generated during live streaming when these gifts are presented to the broadcasters by users. Purchase and use of these virtual items are a new way for users to participate in live streams, which stimulate interactions between broadcasters and users and encourage users to contribute to live streams, rather than merely viewing.

Users may also purchase time-based virtual items from the company, such as the membership with the designation of Noble Members for themselves, and premium status for their favorite broadcasters. There are several tiers in the company's membership program and each tier offers a range of privileges and benefits, such as virtual items exclusively available to members, dedicated customer services specialist and bullet chatting with special colors.

The company shares revenues generated on its platform with broadcasters and talent agencies.

Advertising Services

The company derives part of its revenues from advertising placements on its platform. The company offers customized advertising services aimed at targeted demographics.

There are various forms of advertising on the company's platform. The company offers display advertisements, which include background advertisements that appear on the side of a live stream screen; advertisements placed in various areas of its platform; and advertisements placed on the launch screen of its mobile apps. The company also offers native advertisements through providing monetary incentives to its popular broadcasters in exchange for product placement or game promotion in their live streams. The company also utilizes its integrated platform to provide event-driven advertising solutions for advertisers, such as advertising campaigns during e-sports tournaments and game events. The company strives to creatively design tailored advertising campaigns for advertisers without compromising user experience. The company focuses on content, style, design and interactive features of the advertisements so that they will not be disruptive to its users. Leveraging its strong brand recognition and the company's premium content and broadcasters, the company launched its first advertising distribution platform in August 2019 to further support the fast-growing number of its advertisers and meet their specific needs. The advertising platform is a performance-based system that optimizes advertising distribution processes with precise targeting and customized promotional strategy.

The company's advertising revenue is derived from advertisers in the games industry, including game developers, publishers and e-sports organizers, as well as from international and domestic companies that operate across a variety of industries, including electronics, online retail and automobiles.

Others

The company also generates a portion of its revenues from sub-licensing certain licensed e-sports content. The company purchases broadcasting rights of e-sports tournaments and game events from e-sports content providers, and some of the licensed content permits sub-licensing to other live streaming platforms.

In addition, the company develops and operates certain mobile games jointly with third-party distribution platforms, and game related apps. The company's users access those games through its platform and purchase in-game virtual items that enhance their playing experience.

Content Moderation

The company is committed to complying with the relevant laws and regulations on online content and dedicated to the protection of third-party copyrights. The company has invested significant resources in developing advanced content monitoring and copyright protection technologies, policies and procedures.

The company maintains multiple layers of content management and reviews procedures to monitor live streaming content on its platform to ensure that it is able to promptly identify content that may be deemed to be inappropriate, in violation of laws, regulations and government policies or infringing upon third-party rights. When any inappropriate or illegal content is identified, the company promptly terminates the live stream and removes the concerned comments or bullet chats. Further actions may also be taken to hold relevant content creators accountable.

The company's automated AI-backed screening mechanism serves as the first layer of defense in its content review system. This system automatically flags and screens out live streams that involve inappropriate or illegal audio, video, comments or chats by comparing the image, sound or text against the company's databases in real time. Once the content is processed by the company's AI-backed automated screening mechanism, its system then extracts identifiers from the content and sends them to its manual content screening team, its second layer of defense, for further review. The company's manual content screening team screens and monitors content uploaded to its platform on a 24-hour, 7-day basis to ensure that the flagged content is reviewed and any inappropriate or illegal live stream is immediately suspended or terminated. In addition, the company's manual content screening team proactively monitors and reviews the live streams independently on a real-time basis.

The company's third layer of defense is its frequently updated blacklists. This is a database built upon historical attempts or incidents of inappropriate or illegal live streams or other information provided by the company's third-party partners. Broadcasters or users listed on such blacklists may be temporarily or permanently banned from streaming or viewing on the company's platform, or may be subject to more stringent review and monitoring by its team on a case-by-case basis.

Finally, the company has adopted an easy-to-use and responsive abuse reporting mechanism on its platform, which allows any of its users to report inappropriate content through report links.

The company's broadcasters are required to register on a real-name basis. In addition, the company requires broadcasters to consent to the terms and conditions set forth in the broadcaster agreement of its platform before they can start live streaming. Pursuant to such agreement, each broadcaster undertakes not to live stream or otherwise distribute content that violates any PRC laws or regulations or infringes upon the intellectual property rights of any third party, and agrees to indemnify the company for all damages arising from third-party claims against it caused by the infringing content produced by such broadcaster.

Intellectual Property

As of March 31, 2023, the company had registered 617 patents in mainland China, and had applied for 769 additional patents with the PRC State Intellectual Property Office and 71 additional patents under the patent cooperation treaty.

The company has registered 262 software copyrights and 86 copyrights of artworks with the PRC National Copyright Administration. The company has 223 registered domain names, including huya.com. As of March 31, 2023, the company had 1,039 registered trademarks in mainland China (including Hong Kong, Macao and Taiwan) and 273 registered trademarks overseas, including its 'Huya' trademark, and was in the process to register additional 173 trademarks.

Branding and Marketing

As a supplement to word-of-mouth marketing, the company often promotes its brand and platform through a mix of online and offline marketing and promotional events. The company markets its platform through advertisements on search engines and various app stores and websites. The company also cooperates with smartphone manufacturers, game developers and publishers, or internet cafes to attract new users. With respect to its offline marketing measures, the company organizes meet-and-greet events for its users to meet star broadcasters, sponsor e-sports tournaments and game events and holds other user community events.

Research and Development

The company's research and development expenses included RMB680.4 million (U.S.$98.6 million) in 2022.

Competition

As a leading player in China's online live streaming market, the company faces competition from providers of similar services, such as DouYu, and other online entertainment platforms, such as Bilibili, Kuaishou, and Douyin.

Government Regulations

To comply with such foreign ownership restrictions, the company operates its live streaming platform in China through Guangzhou Huya Information Technology Co., Ltd. (Guangzhou Huya), the variable interest entity, which is owned by Linzhi Tencent Technology Co., Ltd. The company gained control and became the sole beneficiary of Guangzhou Huya through a series of contractual arrangements between Guangzhou Huya Technology Co., Ltd. (Huya Technology), Guangzhou Huya and Guangzhou Huya's shareholders. Moreover, Guangzhou Huya is the registered holder of domain names, trademarks and facilities necessary for the company's daily operations, which is in compliance with (the PRC Ministry of Industry and Information Technology) MIIT Circular 2006. The company is advised by its PRC legal counsel, Commerce & Finance Law Offices that based on its understanding of the current PRC laws, rules and regulations, its corporate structure complies with all existing PRC laws and regulations. Guangzhou Huya holds an effective License for Production and Operation of Radio and TV Programs, covering the production, reproduction and publication of Radio and TV Programs (excluding current political, news and similar subjects and columns).

History

HUYA Inc. was founded in 2014. The company was incorporated in Cayman Islands in 2017.