The Chinese gaming market is expected to grow 14% per year from 2019 to 2024. One company that is likely to benefit from this is HUYA Inc (NYSE: HUYA).
Instead of competing directly with other gaming companies, HUYA Inc is a gaming streaming platform where gaming fans can watch live video game content. It earns money by selling advertising space, and virtual items to users.
The virtuous loop
HUYA is one of two (the other being DouYu) dominant live-game streaming platforms in China. HUYA also hosts eSports events, which are professional e-gaming tournaments.
As a leading player in the game streaming industry in China, HUYA boasts a large network of streamers and viewers. This has resulted in a network effect.
Streamers create content for viewers, which leads to more viewers. The ability to reach a larger audience attracts more streamers to choose HUYA as their streaming platform. More streamers leads to more content for viewers, and round and round the flywheel goes.