On July 17, Betta celebrated its first year of listing. The stock price returned above the issue price, and the market value exceeded 4.2 billion US dollars. However, in January, the tentacle of profit and loss balance was in jeopardy.

The tentacle to the left and Betta to the right is a reflection of the polarization of the game live broadcast. This scene is very much like last year's Pandas and Betta. Panda, which once had unlimited popularity, declared bankruptcy, then Betta went public in the US and ushered in a bright moment, forming a stable pattern of “double dominance” with Huya. According to the Mob Research Institute report data, by March of this year, in terms of the number of active users, Huya and Betta had accounted for more than 80% of the total market share of game live streaming. This means that the direction of the industry basically depends on how these two “absolute leaders” interpret them. The focus of competition between the two sides has also shifted from competition at the traffic level to competition for efficiency.

Although the trend of game live streaming has been decided, with the medium and long-tail platforms being phased out one after another, rapidly rising short videos such as Douyin and Kuaishou, as well as social platforms such as Xiaohongshu, etc., are all empowering live broadcasts and penetrating each other. Last year, Kuaishou and Station B even spent a lot of money to acquire tournament copyright, build e-sports teams, and increase game streaming.

In the face of new entrants, the growth curves of Betta and Huya have not been affected. Betta, the “back wave” of the capital market, in particular, has shown full momentum. Betta has now caught up with Huya in terms of efficiency and profitability, which is one of the key factors why it has been recognized by the capital market.

Judging from the data, in terms of operating profit margin, Betta overtook Huya in the fourth quarter of last year, further expanded its advantage in the first quarter of this year, and caught up with quarterly earnings for the first time. Furthermore, Betta has shown a long-term trend of suppression of Huya in terms of the number of paying users, revealing Betta's stronger monetization potential.

What did Betta do right?

Betta's logic of continuing to lead the industry can be attributed to two aspects:

From a strategic perspective, Betta saw gaming and e-sports as a good track from the beginning. Unlike live streaming (entertainment) shows, game streaming has a clear user group, that is, game users. Users are highly sticky, the industry chain is perfect, and commercialization is mature. This also determined the rapid diversion effect after the rapid rise of content formats such as short videos, which led to a double pattern of “ice and fire” between live shows and game broadcasts. The capital market, on the other hand, voted with its feet, showing the superiority of the game live streaming business model.

From a tactical perspective, Betta firmly grasps its core resources and capabilities at every stage. In the early stages, there were many platforms, and anchors, especially leading anchors, were the key to attracting popularity. Betta was born out of Station A and a game battle platform, and has signed contracts with most of the industry's top anchors. Before its launch, Betta was already far ahead in terms of the number of anchors, number of new anchors, and number of new anchors. The coverage of leading game anchors was particularly outstanding. One year after going public, Betta's leading anchor advantage has further expanded. According to the Little Hulu Live Index, in June 2020, they occupied 11 seats, 15 seats, 19 seats, 13 seats, and 12 seats in mainstream game sectors such as League of Legends, PlayerUnknown's Battlegrounds, DOTA2, DNF, and LOL Genting, respectively.

In addition to anchor resources, tournament copyright is a basic element of content production for game streaming platforms. Betta is backed by Tencent, the majority shareholder, and has basically covered all mainstream game types and leading products. In addition to its self-hematopoietic ability, Betta continues to invest and layout around the e-sports industry chain. The tournament ranges from broadcasting and external recruitment to self-production, and teams from signing to sponsorship to recruitment of top anchors, etc. Betta is more determined to invest in gaming and e-sports than Huya, which has more serious genes in the show.

At the end of the day, Betta is more content-heavy. The content ecosystem has always been the strategic focus of Betta's long-term investment. This can be seen from the fact that Betta's share of content costs continues to be higher than that of Huya.

Moreover, Betta is also more detailed in content management. Betta began a long time ago to proactively optimize the anchor management model to ensure the continuous hematopoiesis of rising star anchors. Continuously applying the anchor management model that combines direct management of leading anchors and long-tail anchors in guild management, a high-quality content system has been quickly established. In particular, when it comes to live streaming of new games, Betta guides high-quality anchors to launch broadcasts in the new game section through active guidance or joint recruitment by guilds, etc., to guarantee the supply of innovative content.

Therefore, in the face of new entrants such as Kuaishou and Station B, Betta has a significant advantage in resources such as anchors, games, and tournament copyright, etc., and is mainly a hardcore gamer. For “rookies” who follow a light game path, it is tantamount to a drop in the downside.

New opportunities for the future?

Currently, the game streaming industry has ended the first half of the rapid expansion of the platform. Betta and Huya's user growth has slowed slightly. However, it is undeniable that with the increasing maturity of the e-sports market, the ceiling of game streaming platforms is still very high. At the same time, currently, various platforms are also struggling to develop more innovative businesses, and have slowly opened up more commercial monetization opportunities.

1. The e-sports market has yet to explode, and there is still room for improvement in the penetration rate of live game broadcasts

According to data from iResearch, the overall market size of e-sports exceeded 110 billion yuan in 2019, and is predicted to reach 165 billion yuan in 2021; in 2019, the number of e-sports users in China reached 470 million, and is expected to reach 550 million in 2021. In contrast, the total number of users of Betta and Huya is also about 300 million users, and the penetration rate of the entire online live streaming industry is only 60%. There is still a lot of room for exploration among domestic game consumers, mainly e-sports game users and heavy game consumers.

2. “Live streaming +” business model innovation, exploring diversified monetization

In 2019, live e-commerce was on the rise. Social and live streaming platforms entered e-commerce one after another, and e-commerce was also developing content-oriented strategies one after another. Betta launched live e-commerce in December 2019, and has continued to increase this year, and has already achieved impressive results in the initial test.

Furthermore,“Live streaming+cloud gaming” has become one of Betta's key potential areas under the 5G new technology cycle.

Betta launched a cloud gaming platform in November 2019, taking the industry's first shot. According to the company, Betta has now deployed nearly 20 mobile games and more than 30 mobile games in the cloud.

3. Going out to sea to test the waters, with good results

Going overseas has become one of the common themes of Internet vendors in the past two years.

Huya officially went overseas with Nimo TV in May 2018, mainly in Southeast Asia and Latin America. In the past two years, Betta has also accelerated its globalization, concentrating on markets such as Southeast Asia and Japan. Take Japan as an example. Betta teamed up with Japan's Mitsui & Co., Ltd. to launch Mildom, a game streaming platform in August last year. As the third largest game market in the world, Japan has a deep industrial base, yet its professional game streaming platforms are scarce, and it has not formed a mature anchor management system or tournament live streaming operation model. Betta has shown strong competitiveness since entering Japan. According to data from the “Japan Game Streaming Market Research Report” released by ABeam Consulting, as of May of this year, Mildom's mobile MAU has ranked among the top three game streaming platforms in Japan, ranking first in the industry in terms of downloads.

Summarize

Since Betta went public, the medium and long tail platforms have been removed one after another, and the “fish tiger rivalry” monopoly trend has intensified. The overall pattern is becoming more stable and at the same time divided. Betta has managed to catch up with efficiency and profits through continuous investment in the gaming and e-sports content ecosystem and a refined operating model. It has been recognized by investors, and its stock price continues to reach a new level. Since June of this year, Betta has received numerous acclaim from major banks such as Komo, Bank of America Merrill Lynch, and Huaxing Capital. The company's growth expectations in terms of the overall penetration rate, monetization rate, and cross-market layout of game broadcasts are expected to form medium- to long-term support for stock prices.