Reviewing the announcements issued by both the two live streaming platforms last night, in the preliminary non-binding merger proposal issued by Tencent, several details are worth mentioning:

• HUYA Inc. 's newly issued shares in exchange for DouYu International Holdings Limited's outstanding shares

• Tencent, the controller, acquires the shares of some shareholders of HUYA Inc., which are 30 million shares held by YY and 1 million shares held by HUYA Inc. CEO Dong Rongjie.

• Tencent's stake in HUYA Inc. increased to 51%, and voting rights increased to 70.4%.

• The integration of HUYA Inc. and DouYu International Holdings Limited has two points: one is what it means for the future of the industry, and the other is what kind of strategic considerations Tencent implies.

Ten billion dollars, baby.

Through the data of HUYA Inc. and DouYu International Holdings Limited in the first quarter of 2020, we can know the mass after the merger:

• The quarterly income is 4.69 billion yuan = 2.41 billion yuan + 2.28 billion yuan.

• The net profit belonging to the listed company is 560 million yuan = 260 million yuan + 300 million yuan, and the net profit margin is 12%.

• The MAU reached 310 million = 150 million + 160 million, in which the mobile MAU reached 130 million = 70 million + 60 million (without weight removal).

• The market capitalization is likely to exceed $10 billion= $5.4 billion + $4.6 billion。

At that time, HUYA Inc. and DouYu International Holdings Limited will be far ahead in the market share in the field of game live broadcasting.

According to the platform data of Xiao Hulu on July 9, HUYA Inc. and DouYu International Holdings Limited merged in the field of live broadcasting (note that it is not limited to live games), except that the income from gifts is less than that of Douyin (live games of Douyin are very weak and negligible). Whether it is the number of active anchors, gift revenue and the number of interactive bullet screens, there will be a big gap between Fanxing Live, YY Live, NetEase, Inc CC, Bilibili, Kuaishou Technology, Penguin e-sports.

After the mergerAdvantagesIt is obvious:

1. The scale effect is more significant. In the past, the game live broadcast industry was more than two super strong, but now the game live broadcast industry is more than one super.

2. After the increase in concentration, revenue sharing and content cost, the main variable cost, will have a lot of room to reduce. HUYA Inc. Q1 income sharing and content cost is 1.53 billion yuan, accounting for 63% of income; DouYu International Holdings Limited Q1 income sharing and content cost is 1.57 billion yuan, accounting for 69% of income. With the reduction of this cost, the net profit margin will increase significantly.

3. When the dust in the field of game live broadcasting has settled, the greater exploration of "live broadcast out of the circle + innovative realization mode + other income" will enhance the imagination of listed companies.

If HUYA Inc. and DouYu International Holdings Limited can complete a good integration of the two platforms, the life of other platforms will be sad, which plays a decisive role in Tencent's "bottom thinking" in the field of entertainment.

Tencent's bottom thinking

What is low-level thinking? In fact, it's the same as building a house.The superstructure is as high as the foundation.Buildings built on air, buildings built on clay, buildings built on steel and concrete can not be compared with the degree of stability in the future.

Tencent's early underlying thinking was user traffic.QQ and Wechat come down in a continuous line, this is the Internet online stage of the game, traffic tax geese plucking.

Until after 2015.It is obvious that Tencent's underlying thinking has shifted from traffic to intellectual property rights, or more precisely, copyright.

Why 2015? This is judged by permeability and some investment actions.

Penetration is one of the most important criteria for judging industry trends: growth slows sharply after exceeding 50%. Wechat's MAU was 690 million in 2015, roughly the same size as the same period, when Internet penetration was just over half.

If you grow by washing instant messaging (Instant Messaging) traffic, you will soon encounter a bottleneck.

At this time, Tencent quickly changed his way of thinking and took a road of entertainment "consumption upgrading".That is, binding high-quality copyright in various fields, the general path is mergers and acquisitions, so as to drive the growth of the revenue of the value-added services segment. Re-examine some of Tencent's key mergers and acquisitions from this perspective:

• The copyright of novels in China Literature's hands

Starting point Chinese network has more than 4700 high-quality IP, with "Ghost blowing Lantern", "Qingyu year", "Nirvana in Fire", "full-time Master" and so on, repeated derivative development can not see the ceiling.

• The game developer of Tencent's game.

"LOL" developer Riot Games, "Fortnite" developer Epic Games, "tribal conflict" developer Supercell, "Assassin Creed" developer Ubisoft and so on.

In addition to ironing the fluctuations of the game business and expanding the basic disk, another significance of acquiring game developers is that in the future subscription era of cloud games (cloud computing is the ticket for cloud games, Tencent has), with a powerful game studio, in order to provide more games, attract too many users, may form a network effect winner take all.

• The exclusive copyright in Tencent Music's hands

Before QQ Music and CMC (with KuGou and Kuwi under it), KuGou music was the first, QQ Music was the second, and Kuwi music was the third. After the merger of TOP3Anxin Securities reports that its music rights account for more than 90% of the market. This is almost a monopoly pattern.As a matter of fact, the relevant departments did launch a monopoly investigation later (according to financial reports).

Based on exclusive copyright, Tencent Music's investors dare to compare spotify and imagine a 50 per cent user payment rate at 6.5 per cent.

As mentioned aboveGradually holding the largest game live broadcast platform, what is the bottom layer? It's the anchor.

According to the data of small gourd big data platform,Hot TOP1000 anchors are highly concentrated. After the merger of HUYA Inc. and DouYu International Holdings Limited, the share of TOP1000 anchors is more than 60%.. In the online world, this is pretty good for the major platinum writers. Can continue to produce high-quality video, real-time or recording to watch, extend the life of the game.

In each field, whether there is the most powerful group of people, the concept is completely different. For example, playing Warcraft, playing LOL, playing Arena of Valor, many professional players who have retired will be broadcast live on these two platforms.

This low-level fact can not only protect traffic, prolong the time for players to play games, save their users, but also expand the value of users' life cycle. World champions have broadcast to you live, so why don't you come up and appreciate some gifts?

In the field of entertainment, it is almost invincible to build a business model with a strong advantage of scale as the bottom layer.Specifically, it is shown as follows: China Literature to palm technology, Tencent games to NetEase, Inc games, Tencent Music to NetEyun music, HUYA Inc. DouYu International Holdings Limited live broadcast platform to Kuaishou Technology, Bilibili Inc. and other companies' cross-border live broadcast business.

Above, the underlying thinking of Tencent's cultural and entertainment layout copyright exists like an invincible fleet in China.

But even so, we still have to say that this does not mean that Tencent's thinking at the bottom of the full dimension of intellectual property is unassailable, it is just a "half-fooled intellectual property company".

Armor can't cover the weakness.

As we said earlier, Tencent is only relatively strong in acquiring and forming a business model with copyright as the core, except that he has significant weaknesses.

1. For example, Tencent's software copyright.

When we say that Tencent's software is not intelligent enough, it is not that Tencent's software developers cannot compile algorithms, do not know how to learn deeply, and let programs evolve.

ButThis algorithm does not have a large and diversified data.(caused by Tencent's previous department wall) to feed, there are naturally disadvantages compared with byte jumping, such as doing information flow and short videos, Tencent has been unable to catch up. This piece has been pulled apart by byte jumps.

Leaving aside ideology and trouble-making factors in Emperor Yingdi's election in November, byte beat's Jinri Toutiao and Douyin, the two flagship products, have a clear idea of whether the mining of user data has exceeded the boundaries of the rules. Every user has a scale in his heart.

2. Another example is Tencent's patent moat.

Tencent's weakness in patents is also the weakness of most Internet companies.Only "soft" patents, no "hard" patents.

Although the business model can make money, the Matthew effect built is too fragile, as long as God (gov) word, the Internet empire flew into oblivion, India's move to ko Wechat, know how to ko TikTok.

It can't build SEP (standard-essential patent, standard essential patent) discourse right like those semiconductor chip companies, equal sanction-- if you cut me, I can pay you back, and in the end, we are brothers and we don't know each other.

In November 2018, Ma Huateng and Yang Zhenning Shi Yigong launched the Science Exploration Award, which invested 1 billion yuan in start-up funds to reward 50 outstanding young scientific and technological workers in nine fields, including mathematical physics, life sciences and new chemical materials. Ma Huateng said, "the ZTE incident has awakened everyone and should pay more attention to basic discipline research." In January 2019, Tencent set up a technical committee.

These actions show Tencent's awakening in the field of hard-core intellectual property rights. Maybe one day he will become a complete intellectual property company, no longer afraid of being banned by Curry Brother, and no longer afraid of understanding Emperor's knife sharpening.But to be sure, this process can not be bought with money.