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On June 5th, Douyu released its unaudited financial report for the first quarter of 2024. The financial report shows a total revenue of 1.04 billion yuan, of which the revenue from non-live broadcasting business increased rapidly, with advertising and other business revenues amounting to 239 million yuan, and the revenue contribution ratio rising to 23%. In this quarter, Douyu recorded a net loss of 88 million yuan, with an adjusted net loss of 85.7 million yuan; the gross profit was 109 million yuan, with a gross margin of 10.5%.

Behind this performance, Douyu increased its investment in high-quality content, strengthened collaboration with manufacturers, and implemented refined operations in the first quarter, while actively exploring business diversification to meet users' diverse needs with a rich array of services, successfully broadening its sources of revenue.

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Regarding this performance, the interim management committee of Douyu stated: "In the first quarter of 2024, we continued to enhance the company's diversified business capabilities and strengthened refined operation management by optimizing the company's structure and adjusting operational strategies. We focused more on the needs and experiences of the platform's core users, providing consistently high-quality content while fully leveraging the platform's host resources and content ecosystem to actively explore cooperation opportunities with more game manufacturers, providing users with a richer array of game-related services."

New Growth Driver: Significant Increase in Non-Broadcasting Revenue

Over the past year, Douyu's non-live broadcasting business, which is advertising and other revenues, has shown strong growth momentum. Previous financial reports indicated that the proportion of these businesses increased to 13.2% for the whole of last year. By the first quarter of this year, the proportion rose to 23%, a significant increase from 7.7% in the same period last year.

Industry insiders have pointed out that the new engine driving Douyu's future growth has already started to exert its power. Especially in the first quarter of 2024, although Douyu faced pressures from the macro environment and adjustments in the live broadcasting business, significant progress has been made in the commercial transformation. By deepening services and cooperation in the gaming industry, it has successfully promoted the diversification and healthy growth of platform revenue from aspects such as game prop sales, game advertising, and distribution services.

Cooperation with game manufacturers has become an important part of Douyu's new phase of commercial strategy. Currently, the Douyu platform, by connecting the needs of manufacturers and game players, has not only obtained more exclusive resources and high-quality content but also explored a diversified profit model based on these resources. On one hand, Douyu promotes game props through platform hosts, content creation, and operational activities. On the other hand, based on game props, it has launched a platform game membership business, forming an effective commercial path based on game prop sales.

Taking the CFS championship welfare season in the CrossFire section as an example, the game launched exclusive skins for the Douyu platform and hosts, and the Douyu live broadcast room also promoted related game props, effectively enhancing the activity of the game ecosystem. Data shows that Douyu's game promotion conversion rate is higher than the market average, which not only increases the income sources for hosts in addition to signing bonuses and live broadcast rewards but also further optimizes the company's revenue structure.

In the first quarter, Douyu also revamped its paid membership system, not only optimizing special effects and visual experiences but also cooperating with top hosts to launch diamond fan benefits and customized diamond fan effects, further consolidating the emotional connection between users and hosts.

In addition, the platform has also launched holiday benefits around paid members for festivals such as the Lantern Festival, Spring Festival, Women's Day, and April Fool's Day, as well as gift benefits like the Diamond Fan Space Secret Realm and the Diamond Fan Brilliant Night, placing great emphasis on the paid experience of users and continuously improving their satisfaction and uniqueness.At the same time, Douyu fully leveraged the platform's host resources and content ecosystem in the first quarter, launching a variety of station-wide operational activities to further stimulate user interaction and solidify live streaming reward revenue. The platform integrated resources from multiple divisions, promoting related operational activities to gradually cover from top hosts to more mid-tier vertical category hosts, maximizing the platform's resource advantages and driving the growth of revenue for hosts at different levels.

For instance, operational activities such as the "Dark Domain Tide" contract card cultivation battle in the Fish Joy Festival, the "Lanterns on a Good Night" solitaire lanterns during the Lantern Festival, and the "Penglai Fairy Trace" cultivation in the Douyu Fan Festival covered 80% of the station's live rooms, with daily average active participating users reaching 300,000, 200,000, and 200,000 respectively. The number of users participating in these activities was huge, and the depth of participation in the gameplay was high, making them a gamified approach widely loved and anticipated by both hosts and users.

These activities not only effectively activated user interaction, with a single activity effectively involving 80% of daily active paying users, but also created a word-of-mouth effect, driving user ice-breaking and return flow, and with low resource consumption, driving the revenue increase for mid-to-long-tail hosts by more than 150%.

Increase in high-quality content reserves

In the industry context of "content is king," Douyu continued to focus on building a healthy gaming content ecosystem in the first quarter. While continuously strengthening the platform's compliance standards and enforcement efforts, Douyu focused on enhancing the experience of core users by providing a series of high-quality content and services through refined operations. Douyu expects that these measures will promote the platform's stable and sustained development over the long term.

Statistical data shows that in this quarter, Douyu broadcasted nearly 30 official large-scale events, including the League of Legends LPL Spring Season, King of Glory KPL Spring Season, CSGO Copenhagen Major, and the CrossFire CFPL Spring Season.

In terms of self-produced content, Douyu produced over 40 esports events, including the Douyu Glory Cup S7, Douyu Heroes Cup S4, Yuyu Cup Abyss BP Challenge, and the "Pokémon Unite" Pioneer Tournament on the Douyu online platform. In addition, the classic self-produced event, the Fearless Contract Open Cup, which has been held for three consecutive sessions, this time recruited participating teams from all platform hosts, with the top two teams receiving direct invitations to the Fearless Contract National Tournament.

This quarter, Douyu placed greater emphasis on content cooperation based on resource sharing, striving to break down barriers between platforms and actively expanding new self-produced events.

For example, in cooperation with Taobao in the Fearless Contract section, a Fearless Contract competition was held that was exclusively broadcast on Taobao and Douyu platforms; in cooperation with partners based on their high-quality host resources, multiple cross-platform cooperative events were held, covering various game sections such as League of Legends, King of Glory, Peace Elite, and Teamfight Tactics, providing esports users with higher quality event content.

In terms of host operations, Douyu deeply integrated the advantages of hosts with platform advantages, launching customized content such as official event secondary commentary around top host personal IPs, and host-named fan confrontation events, providing corresponding internal and external exposure, enriching viewing options while helping to increase host attention and forming a good live broadcast ecosystem cycle.To meet the increasingly diverse viewing needs of users, Douyu has also upgraded its product features in Q1. A new "Events" category has been added to the content recommendation secondary column, integrating event content from the top gaming sections, including the full-year event schedule and fixtures, match replays, player ratings, etc. The more direct and high-quality event topics can provide convenience for heavy game users to watch events and enhance the viewing experience.

Through refined operations, Douyu has successfully improved the user experience and increased user stickiness. Financial report data shows that in Q1 2024, the average mobile MAU of Douyu was 45.3 million, and the total number of paying users was 3.4 million.

As of March 31, 2024, Douyu held cash and cash equivalents, restricted cash, short-term investments, etc., amounting to 6.762 billion yuan (about 937 million US dollars).

Compliance management has been elevated to a strategic level.

Starting from the fourth quarter of last year, under the leadership of Douyu's new temporary management committee, platform compliance work has been placed at the strategic level of the company. From system design, process management to technical support, the company has strengthened its compliance self-inspection and standardized management in an all-round and multi-angle manner. The temporary management committee took the lead in building a "four-in-one" (business compliance, content compliance, process compliance, and data compliance) new compliance system on the basis of the original compliance system, continuously improving the compliance standards at the product, operation, and review levels.

In terms of specific compliance measures, in the first quarter, Douyu has launched a number of special actions for a clear and bright network environment and concentrated rectification of illegal content, fully implemented a project risk prevention system, established a product traceability mechanism, improved the interactive anti-addiction system, paid attention to dispute complaint handling, regularly inspected the platform's illegal risks and rectified illegal behaviors, and strengthened the risk awareness education of relevant personnel in the company.

At the same time, the company maintains close communication with regulatory authorities, actively responds to regulatory requirements, takes the initiative to self-correct and self-inspect, and uses artificial intelligence and innovative technologies to monitor business risks in real-time, and quickly and efficiently carry out illegal punishment, to ensure that compliance is firmly and comprehensively guaranteed.

In response to the investigation by relevant government departments into the historical illegal activities of some third-party hosts, Douyu also maintains close communication with relevant departments, continuously strengthens internal self-inspection and self-correction, and maintains the compliance and healthy ecology of the platform. According to the financial report, Douyu has proactively and uniformly refunded the income related to the historical illegal activities of third-party hosts, totaling 111.7 million yuan. Douyu pointed out that the company has always adhered to the business principles of legality and compliance, and this refund expenditure has no substantial impact on the company's daily operations. In the future, Douyu will still resolutely maintain the compliance of the platform, continue to operate steadily, and provide users with a healthy and standardized live broadcast environment.

Overall, in the face of the continuous changes in the recent market environment, Douyu has elevated compliance management to a strategic level, actively adjusted the company's operational strategy, and focused more on the core user needs of the platform and the expansion of commercialization channels, focusing on the healthy development of the business with a longer-term perspective. Douyu stated that in the future, it will rely on actively exploring and more opportunities for cooperation with game manufacturers, further improve the income structure, and achieve its long-term value as a game ecological platform through continuous creation and growth of new products and new models.