China's leading game streaming platforms Douyu and Huya have undergone massive layoffs, joining a slew of Chinese internet companies to scale back business operations amid an economic slowdown in the country.
Huya's layoff mainly hit its international business department, with roughly 70% of the department's staff being layoff.
The company's Nimo TV unit, launched in 2018 as an international version of Huya, is most heavily hit with significant staff cuts already implemented.
Huya is also planning a 20% cut in its domestic business, focusing on new businesses such as cloud gaming.
"Given the rapidly changing business environment, Nimo TV has made some strategic adjustments and optimisations for business, and will allocate resources to key regions in the future," a Huya spokesperson said.
In a post on Maimai, a couple of unidentified Huya employees said they were informed to leave immediately after receiving the official notice. In China, companies are required to give a month's notice if they plan to fire more than 20 employees due to restructuring or other streamlining measures, which gives the workers time to find new jobs.
Citing a source close to the matter, Chinese media Tech Plant first reported that the country's largest video streaming platform Douyin recently started a 30% layoff that affected multiple departments, including business development for games and live streaming in Shanghai, Beijing, and the Wuhan office.
Explaining the rationale behind the move, Douyu said it was just part of their normal human resources optimization.
The layoffs came against the backdrop that Chinese regulators have ramped up scrutiny of the live streaming industry, and Tencent shut its in-house video game streaming arm Penguin Esports this month.
Since last year, China's live-streaming sector has been dealing with a tighter regulatory landscape as the country's regulators vowed to clean up irregular activities and chaos in the sector. In August 2021, China's Ministry of Commerce outlined proposals for an industry standard for the live-streaming industry. The authority detailed the guidance about how live-streamers should dress or speak in front of the camera.
Layoffs at Huya and Douyu are another blow for Chinese gaming giant Tencent, which holds majority stakes in both companies. In July 2021, The State Administration for Market Regulation (SAMR) blocked a merger deal between Huya and Douyu in July 2021 to avoid the monopoly of Tencent in the game streaming market.
Panda TV's failure makes way for Tencent to dominate live streaming. Panda TV, owned by the flamboyant son of one of China's richest men Wang Jianlin, had ended its service after failing to raise fresh funds to support its operation in March 2019.
Since Panda TV's failure, China's game-streaming market has been dominated by Tencent, which also controls many other aspects of China's game-streaming industry, such as e-sports. In addition to investing in Douyu and Huya, Tencent launched its self-developed game live-streaming platform eGame in July 2016.
Tencent has made a heavy investment in many aspects of the game live streaming and esports business, importing foreign online games titles to China, hosting gaming championship events, and acquiring game streaming platforms that broadcast the events.
Heavy investments in game live-streaming and esports businesses have bolstered Tencent's revenue from games such as its League of Legends because broadcasting LOL championship events generates high attention for its games.
Huya and Douyu's revenue stream are highly dependent on its users, who buy virtual gifts ranging from toy rockets to fish ball to reward their favorite streamers.
However, the number of paying users and monthly active users on Huya and Douyu saw flat growth in the past year, mainly driven by a tighter regulation on the live-streaming platform and the rising challenge brought by short videos.
Huya and Douyu's layoffs followed similar moves by other Chinese tech giants, including Alibaba and Tencent, which have laid off tens of thousands of employees combined this year to scale back business operations.
Chinese media reported that Alibaba and Tencent would cut 10-15% of their workforce separately this year in their biggest rounds of layoffs as they tried to deal with declining revenue due to the economic slowdown and Covid-19 outbreak.
Last week, Chinese social media and e-commerce platform Xiaohongshu reportedly cut roughly 10% of its workforce as part of its business restructuring efforts.