Tencent merger of Huya and DouYu game streaming sites blocked by Chinese regulators

Tencent has recently seen pushback from the efforts to streamline two of its most major investments in China. Recently, the Chinese gaming giant moved to try to merge the Huya and DouYu video game streaming platforms in a $5.3 billion USD deal. However, following review, it would appear that market regulators are set to block the merger from occurring, keeping Huya and DouYu as separate entities.

This news was recently reported over the weekend, as shared by Reuters and CNBC, who shared that the State Administration of Market Regulation (SAMR) planned to block the proposed merger on Monday, July 12, 2021. Huya and DouYu are the number one and number two video game streaming services in China, respectively, granting millions of people viewership of various esports events. Not only are both firms listed in the United States, but Tencent also has a investment of over one third in each company, which represent a combined total market value of an estimated $5.3 million USD.

Huya and DouYu control the lion's share of video game live streaming entertainment viewership throughout China, for which a merger would threaten competition according to Chinese market regulators.

The announcement by Chinese market regulators to block the merger comes even after Tencent attempted to introduce additional concessions on top of the initial merger deal, which were still not enough to assuage concern of Tencent’s overall control of the Chinese video game streaming market. This also comes after Tencent subsidiary, ByteDance, acquired mobile game developer Moonton outright, which operates the popular Mobile Legends MOBA, in a $4 billion deal. Tencent is no stranger to acquisition, investment, and mergers like the proposed one for Huya and DouYu. However, there has also been a crackdown in Chinese online markets and cybersecurity, which has affected cryptocurrency and businesses like rideshare app business Chuxing in the country and in markets abroad.

For the time being, Chinese regulators see the proposed merger by Tencent as a threat to fair competition. While DouYu stated that it respects the decision, it will remain to be seen if this is truly the last we hear of the matter. Huya had no comment on the merger at the time of this writing.