Tencent, the Chinese multinational technology and entertainment conglomerate and holding company headquartered in Shenzhen, is shutting down its game streaming service, yet another indicator that China’s anti-Big Tech campaign and crackdown on the live streaming business has hampered growth at some of the country’s most prominent internet giants.
Penguin Esports, a streaming platform, stated on Thursday that it would discontinue all services on June 7, citing changes in “commercial growth strategy.”
Tencent launched Penguin Esports in 2016 and primarily focuses on game live streaming, including broadcasts of esports contests, akin to Amazon’s Twitch service. It has the streaming rights to several Tencent’s popular games in the nation, including Honor of Kings and League of Legends.
Penguin Esports has yet to establish itself as a market leader. According to the country’s antitrust commission, Nasdaq-listed Huya and Douyu are now leading China’s video game streaming warfare, accounting for more than 70% of the industry. Tencent also has a significant investment in Huya and Douyu.
Tencent intended to sell Penguin Esports to Douyu for $500 million in 2020, and then combine Douyu and Huya into a new firm that would consolidate its stakes in the platforms. Based on the stock values of each company at the time, the transaction was valued at almost $6 billion.
However, the merger agreement was halted in 2021 by China’s antitrust authority. According to a statement issued at the time by the State Administration of Business Regulation, the combination of Douyu and Huya would expand Tencent’s dominance in the video game streaming market, giving the corporation too much market power and perhaps discouraging fair competition. Penguin Esports was terminated as a result of an extraordinary government crackdown that has severely halted revenue growth at the country’s most prominent online businesses, forcing them to lay off personnel and search for methods to cut operational expenses. Since late 2020, Chinese authorities have been on a broad drive to rein in major actors in areas ranging from technology and banking to gaming, entertainment, and private education.
Tencent recorded its weakest revenue growth since its first public offering in 2004 last month. The termination of the video game streaming business coincides with a stepped-up assault on tax cheating in the country’s thriving live streaming industry.
The State Taxation Administration announced this month that it will begin forcing internet platforms to record live broadcasters’ personal information and revenues every six months. In a March earnings call, Tencent co-founder Pony Ma and president Martin Lau stated that the new laws had caused “fundamental shifts and problems” in the internet business, affecting Tencent’s financial performance.
Lau stated that the corporation will “proactively accept changes” to better connect with a new industry paradigm. Authorities have previously pursued several live streaming celebrities for tax fraud, like Viya, an online superstar who was punished for 1.34 billion yuan ($211 million) in December for hiding personal income.
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