Live streaming platform Douyu struggles for U.S. IPO as China's live broadcasting industry presents a downward trend of growth

Chinese live streaming platform Douyu is planning listing in the U.S. as early as the second quarter of this year to raise around 500 million U.S. dollars.

NBD has contacted Douyu but received no comment from the company as of press time.

The year of 2018 witnessed the highlights of two top live broadcasting platforms.

Game-streaming firm Huya made its debut on the New York Stock Exchange on May 11, with an offer price of 12 U.S. dollars per share, becoming the first IPO in the industry in China.

Inke, a Beijing-based live streaming company, got listed in Hong Kong on July 12 and its shares opened higher by 12.21 percent at 4.32 Hong Kong dollars (55 cents).

Douyu, though backed by Tencent, is on a tortuous way to initial public offering (IPO) compared with its counterparts. Last March, Douyu was arranging for going public in Hong Kong, but later in July, it changed its target to the U.S. and aimed to collect 600 to 700 million U.S. dollars in the market, report said.

An industry practitioner told NBD given the tightened regulation on the live broadcasting sector and the changing market environment, Douyu should mull over which market is the one where Douyu can achieve better fundraising.

An analyst said earlier that Douyu's shifting to the U.S. market is motivated by surge of Huya shares in the first few months after its debut. However, NBD noted that the stock price of Huya rose all the way up to tap 50 U.S. dollars, but then started to tumble, even falling to 14.66 U.S. dollars last December.

In fact, most streaming enterprises found themselves in a tight corner in 2018. Many platforms were tangled with arrears and layoffs and NetEase's BOHE was shut down at the end of the year. Some industry insiders believe more players will end their service in 2019.

China's live broadcasting industry presents a downward trend of growth. According to data from iiMedia Research, the number of online streaming users in China climbed by 14.6 percent to hit 456 million in 2018 and the figure is forecasted to grow slower in 2019, standing at 501 million.

An analyst at the research institution mentioned that the market returns to rationality, which sets higher standards for platforms' contents, anchor cultivation and ability of attracting traffic.

Medium-sized firms tend to integrate resources through restructuring, acquisition and cooperation to gain complementary advantages and rival other platforms. The merger between Huajiao and is an example.

While the fierce competition between the company and Huya continues, Douyu seeks funds from the capital market for transformation of business model.

Once the company is listed, its "live+" strategy will bring new opportunities for Douyu's expansion. In the past two years, Douyu, which started with game broadcasting, was providing streaming contents in other fields, such as e-commerce, pan-entertainment and education.

Differentiated contents could attract more users, but risks also exist. For example, the original business activities and resource allocation will be affected and overall market risk will be intensified in the process of operation.

This is article produced by NBD.