Douyu and Huya, two Twitch-like platforms in China, and both backed by Tencent, are reportedly going to merge with each other, reports Bloomberg.

Nasdaq-listed Douyu said it received from Tencent a preliminary non-binding proposal on August 10 for a strategic combination with NYSE-listed Huya. Tencent, the Shenzhen-based Chinese gaming giant owns about 38% of Douyu, and 37% of Huya with 50.9% of all voting power.

Tencent also notified Douyu in the proposal that it had consolidated voting power within Huya to make sure the deal can go smoothly on its end, by purchasing shares from other Huya shareholders, including JOYY and Huya CEO Dong Rongjie, resulting in Tencent owning 70.4% of Huya's total voting power.

While Douyu said that it is still evaluating the deal, people familiar with the matter told 21Jingji that each party started to negotiate since the two live streaming platforms received the proposal, adding that Tencent’s official proposal implies that the deal will be definitely be settled.

The deal means that the long time competition and aggressive streaming host poaching between the two leading platforms may finally come to an end, so that the newly-consolidated platform can better take on the challenge posed by Bilibili and Kuaishou, two other video/streaming platforms that are just so ironically also backed by, albeit under less of a control of, Tencent.

Douyu and Huya have similar user scale, homogeneous live streaming content, and similar way of monetization. Revenues and user data of the two game-streaming platforms are becoming convergent. Their respective revenue for Q2 2020 were RMB 2.508 billion and 2.697 billion, monthly active users were 165 million and 168 million. Close numbers indicates intense competition and equally competent operations between the two. As a major shareholder of both companies, Tencent is loath to see frictions between them.

Additionally, faced with user growth ceiling, the two companies saw their increase of average MAUs slow down. Douyu’s average MAUs even declined by 7.7 million in Q1 2020, from Q4 2019.

A merger of Douyu and Huya would create a 300 million-users and 10 billion-dollars game live streaming giant, reported Bloomberg, and cement Tencent’s top spot in China’s gaming and social networking industries. However, the exact valid user number the consolidated company remains in question, since a portion of the both companies' 160+ million users might just as well be the same people.

On the other hand, Kuaishou and BIlibili ramped up their video game live streaming efforts over the past two years. Bilibili now reports that its game business lines represents 50% of the company's total revenues, whereas live streaming and value-added service topped RMB452.5 million, representing a 167% growth year-over-year. Bilibili also acquired the Chinese broadcast rights for the League of Legends World Championship for three years from 2020 to 2022, beating Douyu and Huya.

The short video giant Kuaishou's month active users of game centric live streaming service exceeded 220 million, and that of game-related short video topped 300 million, said Tang Yuyu, head of Kuaishou game unit, at China Joy 2020 gaming expo. The two numbers surpassed those of Huya and Douyu. In addition, Tang said the company is also spending 5 billion RMB to subsidize game related short video content creators, and to join hands with colleges in China to train esports talents.