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Tencent-backed Chinese entertainment company Douyu is planning a US initial public offering to raise $600m to $700m by cashing in on the esports phenomenon that is gripping China, according to bankers.
Five-year-old Douyu, which streams videos including online games, had been considering a Hong Kong listing, but is now weighing up a US debut, according to one person familiar with the deal.
Analysts at CBInsights value Douyu at $1.51bn, while business information provider Crunchbase said the streaming company’s total funding valued it at $1.1bn.
The esports market was worth $700m last year, according to NewZoo, including revenues from consumers and from brands that spend on sponsorship, advertising and media rights. The consultancy expects the market’s value will rise to $1.5bn in 2020 as esports becomes one of the gaming industry’s biggest growth drivers.
A listing would see Douyu follow the path of rival Huya, which is also backed by Tencent. Huya’s share price quadrupled from its $12 issue price within a month of its IPO in May. Shares in Huya are now trading at about $36.
Douyu’s plans come as the esports market, which streams video gamers in competition, rapidly expands in China.
At least 60 per cent of esports views were of titles in which Tencent, one of China’s two tech giants and one of the world’s top 10 most valuable companies, has an interest, according to IHS Markit.
Competitive video gaming has taken off globally since Amazon bought Twitch in 2014, paying close to $1bn for the then three-year-old site. Announcing the deal at the time, Amazon chief executive Jeff Bezos said Twitch had made broadcasting and watching gameplay into a “global phenomenon” that would help Amazon “build new services for the gaming community”.
China has the world’s biggest video games market in terms of revenues, according to Huya. China’s esports market has evolved to form part of theme parks and repurposed karaoke bars where people can rent a room to watch gaming on large internet-connected screens instead of singing.
Earlier this month Activision Blizzard signed a broadcast deal with Walt Disney’s ESPN, bringing the finals of Blizzard’s Overwatch League — in which teams of six players compete in a futuristic shootout — on to ESPN’s main sports channel.
Additional reporting by Henny Sender