Chinese live streaming platform Huya is looking to expand into the US

Huya, a Chinese live streaming platform for gaming content, is expanding beyond China and eyeing up the U.S., as the company looks to tap the fast-growing e-sports market internationally.

E-sports refers to professional video gaming where teams play each other in competitions. NYSE-listed Huya streams some of those tournaments and hosts other user-generated content. It makes money mainly by selling virtual gifts to users who then send those to streamers on the platform, a model that helped the firm see 93.4% year-on-year revenue growth for the first quarter, when it reported earnings last week.

Having become one of the main game streaming platforms in China, the company is turning its focus to expanding internationally. It has a product called Nimo TV which it has launched in some markets in Latin America and Asia. And the U.S. could be next once the company has figured out a strategy, according to Rongjie Dong, CEO of Huya.

"We are longing for the U.S. market. We know in the U.S., users have high value and there is a large pool of users," Dong told CNBC in an interview. "We also recognize Twitch as a very strong competitor. We hope we are well prepared and are clear of our strategy before we enter the U.S. market. "

"Huya only started going global for just more than a year and I want to first prove our ability in markets in Asia, Latin America and maybe also in Africa. Once we are well prepared, maybe in the next year or the year after, we can expect a good result in the U.S. market," he added.

Dong was speaking in Mandarin, and he has been translated into English by CNBC.

The global e-sports economy is booming and is expected to hit over $1 billion in revenues this year, according to Newzoo, a market research firm focused on the video games market. North America is forecast to maintain its title as the world's largest e-sports market by revenue, making it an attractive market for Huya. China is expected to be the second-largest.

But entering the U.S. market will bring its own challenges. Huya will face stiff competition with Amazon-owned Twitch and Google's YouTube. It's also unclear whether the business model of virtual gifts, which is popular revenue stream for Chinese and South East Asian apps, would work in the U.S.

The current political environment and worries about the global economy could also be a challenge, but Dong said he's not worried about that.

"Firstly, Huya is in the entertainment business and no matter if the economy is doing well or not, the entertainment business continues to rise. The core of our business will not be affected much. Secondly, the Chinese government is very supportive of e-sports and high tech companies. Thirdly, we believe the China-U.S. relationship won't affect us badly as long as we take further steps to embrace globalization and do this gradually," Dong said.

Investing in teams

Teams, which compete at tournaments, are key components of the e-sports industry. Many competitions have huge prize pots for the winners and players are able to make millions of dollars at a young age. A rising trend is taking place where content platforms like Huya are owning teams.

Xueling Li, chairman of Huya Inc., center left, and Rongjie Dong, chief executive officer of Huya Inc., center right, ring the opening bell during the company's initial public offering (IPO) on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, May 11, 2018.

Michael Nagle | Bloomberg | Getty Images

Huya owns a team called the Chengdu Hunters, which plays in Blizzard Entertainment's "Overwatch" League. Blizzard Entertainment is a subsidiary of Activision Blizzard.

Dong said the purpose of owning a team is not financial reward, but it could help the company build its brand in the e-sports world.

"If we only work with other teams or games, I still feel we are just an outsider to the whole system. We want to be deeply involved in this industry by managing our own team rather than be merely one part of this. We want to feel the whole system by our body and flesh and not to be confined as a content output platform," Dong said.

Dong said Huya hopes to own more teams this year.

While it may not be a financially motivated move, owning teams could open new revenue streams, according to experts.

"For the platforms, the tie in with the team means that players of that platform will stream with them and bring their fanbase to those platforms. It further is a marketing opportunity, branding your streaming platform to one of your core target audiences," Jurre Pannekeet, senior market analyst at Newzoo, told CNBC.

"In the long term, it could become a good investment when the revenue of teams increases and these teams can earn a profit from the teams they own."

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