We observe diverging trends within the sector. The rise in user traffic during COVID-

19 was prominent across the space, and we observed diverging trends within. Short-video

and mid-video platforms outperformed on traffic acquisition and sustained their momentum

into 2H. Competition and weak macro weighed on entertainment livestreaming platforms,

leading to a decline in users and time spent.

Some structural changes are here to stay. (1) continuous content expansion to

acquire users; Bilibili being a prominent example of gaining wider audience and becoming a

mainstream platform; (2) overseas as a growth driver amid a slowdown in the domestic

market; (3) consolidation for value creation: a key trend for major platforms to reduce costs

and alleviate direct competition in traffic; a potential merger between HUYA and DOUYU

will lead to a better profit outlook for both; (4) competition from short-video platforms

continued to intensify, pressuring incumbent players’ margin; (5) livestreaming expanding

from content to infrastructure, supporting growth in other segments such as e-commerce