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Tencent Enters Game-Streaming Service with Investment in Douyu TV

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Live game streaming

On September 17, 2015, The Wall Street Journal issued an article on Tencent Holdings’s (TCEHY) plans to invest in Douyu TV. Douyu TV is a Chinese game service that streams live games. The Wall Street Journal article, citing research from Newzoo, reported that there are 446 million gamers in China (FXI), and gaming revenue in China is expected to reach $22.2 billion in 2015.

Sequoia Capital China currently backs Douyu TV. The game-streaming market in China is heating up, with other players also eyeing this market.

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According to Newzoo, the global gaming market is expected to be worth $113.3 billion by 2018. This market is expected to grow at a CAGR (compound annual growth rate) of 7.9% from 2014 to 2018. The Chinese gaming market is expected to be worth $32.8 billion by 2018. In 2015, digital games are expected to constitute 97% of the total gaming revenue of $22.2 billion in China.

Chinese gaming market is heating up

Besides Douyu TV, another player entering the market is Panda TV. Panda TV is backed by Wang Sicong, son of the wealthiest man in China, Wang Jianlin, who is reportedly worth $26.5 billion. Another competitor to Douyu TV is Twitch, which was bought by Amazon (AMZN) last year for $970 million. Twitch is currently operational in Taiwan and could enter China shortly.

In June this year, Google (GOOG) also announced the YouTube Gaming app to compete with Amazon’s Twitch.

It remains to be seen who wins in this gaming battle. You can get diversified exposure to Google by investing in the PowerShares QQQ Trust Series 1 ETF (QQQ), which has 4.42% of its holdings in the stock. The same ETF maintains 7.17% of its holdings in Microsoft (MSFT).

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