By YU Hao

Douyu released its first financial report since CEO CHEN Shaojie's arrest on gambling charges. Chengdu police arrested Chen on suspicion of running a gambling den along with a well-known Douyu gaming celebrity who has 2.3 million followers. 

The Q3 report shows a year-on-year decline in net income and gross profit. Net income was 13.6 billion yuan (US$1.9 billion), compared to 18 billion yuan in the same period in 2022. Gross profit stood at 1.9 billion yuan, down from 2.5 billion yuan. 

Content costs decreased by 29.7 percent to 9.3 billion yuan, and sales and marketing expenses decreased by 44.5 percent. But R&D spending decreased by 11.7 percent after widespread layoffs since the beginning of last year. 

Net profit has thus improved to 76.4 million yuan, compared to a net loss of 6.6 million yuan in the same period last year.

Unwilling to pay copyright fees, in 2022 Douyu gave up on top e-sports events to develop its own content, but it has proved impossible to replicate the traffic associated with those top events. Copyright fees can run to billions of dollars. At best, investment in the replacements has been only tens of millions.

A more urgent crisis is disruption by short video platforms such as Douyin and Kuaishou. Since Chen was arrested, the live streaming teams of Douyin and Kuaishou have been trying to sign Douyu’s top influencers. A handful of them are already live streaming on Douyin.