(Bloomberg) — Tencent Holdings Ltd. announced it will shut down its game streaming service, more than a year after Beijing blocked its effort to create China’s equivalent of Amazon.com Inc.’s Twitch through a merger.
The streaming platform, called Penguin Esports, will terminate all services on June 7, after having already suspended new user registrations and in-app purchases, Tencent said in a statement Thursday. The company cited a shift in business strategy for the shutdown and said it will compensate users by giving away digital coupons in games like League of Legends, which is operated by Tencent-owned Riot Games Inc.
In 2020, Tencent proposed combining investees Huya Inc. and DouYu International Holdings Ltd. — China’s two biggest Twitch-like services – but the country’s antitrust watchdog rejected the deal after Beijing stepped up scrutiny of big tech. Penguin Esports would have been folded into the newly combined company as part of the transaction, which was valued at about $6 billion at the time.
Tencent had earlier channeled more resources into Penguin Esports, which featured Tencent properties like League of Legends and Clash Royale. Chinese media reported last month that the company had stopped renewing contracts with streamers on the site.
China’s game-streaming industry was expected to grow into a multibillion-dollar business, but newer formats of online entertainment offered by the likes of Bilibili Inc. and ByteDance Ltd.’s Douyin have lured away users and advertising money. DouYu’s sales plunged last year while Huya grew just 4%.
Beijing’s regulators haven’t approved a single gaming title by Tencent or any other game developer since July, which was followed by the government putting in place stricter controls on playing time for minors. Tencent’s domestic gaming sales grew 1% for the December quarter.
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