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YY Inc. is Streaming Hot | EMQQ

 YY Inc. (YY) is a leading online streaming media and gaming company in China.  The company continues to invest in expanding both within China and overseas.  The market for streaming media in China has experienced strong growth and is expected to continue to grow moving forward.  

Purchasing shares of YY Inc. may provide investors with exposure to one of the leading companies in an attractive market segment.

Business Description

YY Inc. is a leading live streaming and social media platform in China.  The company operates two main platforms.  YY Live offers live entertainment and streaming through its mobile and PC applications.  The company’s Huya Broadcasting is a leading live game broadcaster in China.

YY Live

The company offers live online streaming entertainment to its users.  Streaming services are offered on its mobile and PC platforms.  User may stream content in various channels including music, dance, and talk shows, outdoor activities, sports, and games.

The company’s core YY Client product enables users to engage in live online streaming.  Users can watch content in channels featuring music, dance, and talk shows. Users can stream their favourite online games either in a casual or competitive format.  Users may participate in dating shows.  Additional channels include finance, outdoor activities, and sports. YY’s platform also allows users to create content.

The company’s channels allow users to purchase and give virtual gifts, seeking further to monetise its user base.

Huya Broadcasting

Huya is a leading live game broadcaster in China.  Huya enables broadcasters and audiences to interact with each other during live gameplay.  Huya’s platform includes online, console, and mobile games, entertainment, and sports.

Large and Growing User Base

The company’s investment presentation, citing research from Questmobile, touted itself as China’s Number 1 live streaming social media platform in November 2018 based on Monthly and Daily Active Users (MAU & DAY), and total time spent. According to the company’s website, YY’s had over 88 million MAU during the third quarter of 2018.  This represented a nearly 21% increase over 2017’s third quarter.

Strong Financial Results

In addition to MAU growth, the company’s Q3:18 earnings noted a 26.3% year-over-year increase in total live streaming paying users.  

Revenues increased by nearly 33% over last year’s third quarter, reaching RMB 4.1 billion.  The company’s Huya platform experienced a 119% increase in net revenues over this period. The company also initiated contests and subscription offerings to monetize its user base.  The company’s non-GAAP net income attributable to YY Live, which measure excludes non-recurring expenses, increased by almost 20%.  Reported net income grew by 2.3%

Corporate Events

According to Investor’s Business Daily, YY raised $180 million through an IPO of its Huya Broadcasting division.[1]

In June 2018, YY invested an additional $272 million in Bigo Inc., a video-based social media platform headquartered in Singapore.  Bigo’s markets include Southern and Southeast Asia and the Middle East.

During the third quarter of 2018, YY entered into a strategic relationship with Xiaomi to exclusively operate certain entertainment live streaming services on Xiaomi Live.

Market Analysis

The online streaming market in China has experienced strong growth and expectations are for that growth to continue.

There were nearly 600 million social media users in China during 2017 and that number is expected to reach 725 million by 2022.[2]  According to China Internet Watch, China’s adult population will spend, on average, 6 hours and 23 minutes consuming media during 2018.  They project that 50% of that time will occur on the internet.[3]

China online video market kept a high growth of around 50% for five years running and made a record revenue of 95.23 billion yuan (US$14.9 billion) in 2017.[4]  China had over 570 million online video users, accounting for three-quarters of its total internet users.

Summary

YY Inc. is a leading Chinese live streaming company.  The company operates live streaming and live gaming platforms in China and through recent strategic investments is looking to grow internationally.

The company has experienced strong result.  Additionally, the streaming market as a whole has experienced strong growth in China.

Purchasing shares of YY Inc., may provide investors with potential exposure to the streaming media and gaming markets in China.

As of 20th June 2019, the Emerging Markets Internet & Ecommerce UCITS ETF (EMQQ) held 0.94% in YY Inc

Read our EMQQ Whitepaper "The Great Confluence" here

Find out more about the EMQQ Emerging Markets Internet & Ecommerce UCITS ETF. 

Article Date: 17th March 2019. 

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