Tencent Urges Merger Of China’s Two Biggest Game-Streaming Platforms

Tencent Holdings, widely known for its mobile text and voice messaging service WeChat, is behind extensive talks to merge China’s biggest game-streaming platforms, reported Bloomberg News.

Beyond this attempted megamerger, the tech company is on the move. Tencent has just launched WeChat Minishop, which will allow merchants to create an eCommerce mini-program inside WeChat using the tech giant’s tools instead of paying for developers.

Tencent started WeChat in 2011. The app is available on Android, iPhone, BlackBerry and Windows phone platforms and has more than 300 million active users, Tencent says on its website. The app competes with WhatsApp and Viber.

Tencent is now looking to merge gaming powerhouses Huya Inc. and DouYu Holdings, which would create a dominating force in China’s gaming industry. Already, Tencent owns a 37 percent stake in Huya and 38 percent of DouYu, Bloomberg reported. Tencent aims to be the largest shareholder in the combined entity, sources said. The talks are private.

A deal would create an online giant with a combined market value of $10 billion. Tencent has been facing rising competition for advertisers from ByteDance Ltd. and its numerous apps, said Bloomberg.

The Tencent negotiations are taking place against the backdrop of China’s worsening relations with the U.S. They can be seen as a bid to solidify Tencent’s home market position. WeChat has a limited U.S. presence, and Trovo Live, a game-streaming service aimed at American consumers, is only in its initial stages, Bloomberg said.

According to iResearch, China’s game-streaming market will generate an estimated $3.4 billion in revenue this year.

The multinational conglomerate Tencent beat earnings forecasts in the first quarter of 2020 with total net revenues of $15.2 billion, up 26 percent from the same period of 2019, according to a press release.

The company posted a first-quarter profit of $4 billion, up 29 percent from last year, thanks in part to increased gaming revenue as people stayed home due to the international pandemic. Online game revenue for the quarter, ending March 31, was up 31 percent year over year to $5.3 billion.