Chen Shaojie, the 39-year-old CEO of the Chinese streaming platform DouYu, has been arrested by police in Chengdu around November 16, 2023, the company announced on the evening of the 21st, Beijing time. DouYu has not received any official notification regarding the reasons for Chen's investigation or arrest.
The company expressed concern that Chen's continued detention and any subsequent legal actions against related parties could significantly impact DouYu's reputation, business operations, and financial performance. Following the announcement, DouYu's stock price dropped by more than 10% in pre-market trading in the U.S., reaching a low of $0.86 per share.
Chen, whose net worth once reached 2.5 billion yuan, has had a remarkable entrepreneurial journey. Born in Jinan in 1984, Chen developed a passion for gaming from a young age and spent nights in internet cafes during his university years, eventually dropping out.
In 2006, at the age of 21, Chen moved to Wuhan and quickly found a job developing a gaming platform, leveraging his decade-long experience as a gamer. In 2010, at 26, he acquired the "originator of the second dimension websites" in China, A Station, and established its "Live Broadcasting" channel. In 2014, he spun off this channel into what is now known as DouYu TV.
DouYu, headquartered in Wuhan, is a game-centric streaming platform where users can enjoy interactive gaming and entertainment live streams on PC and mobile apps. The company went public on NASDAQ in July 2019, reaching a market value of nearly $4 billion. Chen's personal wealth skyrocketed, placing him 1507th on the "2019 Hurun Rich List" with a fortune of 2.5 billion yuan.
In 2020, DouYu planned a merger with another gaming platform, Huya, but the agreement was terminated in July 2021. DouYu's financial performance has been declining for three consecutive years. In early 2021, the company's stock price peaked at $20.54 per share but has since fallen by over 90%. As of November 20, DouYu closed at $0.962 per share, with a total market value of $308 million.
Earlier this year, DouYu faced regulatory scrutiny for issues related to pornographic and vulgar content. In May, a work group was dispatched to DouYu for a month-long concentrated rectification under the guidance of the National Internet Information Office and the Hubei Provincial Internet Information Office. DouYu responded by stating its commitment to cooperate with the inspections and guidance, to deeply carry out content rectification, and to further optimize its content review mechanisms to create a healthier and more positive live streaming environment.
DouYu's revenue for 2020-2022 was 9.6 billion yuan, 9.1 billion yuan, and 7.1 billion yuan, respectively, indicating a downward trend. The company also reported losses for two consecutive years in 2021 and 2022.
In the second quarter of this year, DouYu's net profit increased by 161% year-over-year to 61.4 million yuan, but total revenue dropped by 24.1% to 1.392 billion yuan. The company also faces challenges with declining active and average paying users. The average mobile monthly active users in the second quarter dropped from 55.7 million in the same period in 2022 to 50.3 million, and the average number of paying users decreased from 6.6 million to 4 million.
Huya, another leading gaming streaming platform, is also struggling. Its revenues for 2020-2022 were 10.9 billion yuan, 11.4 billion yuan, and 9.2 billion yuan, respectively, showing stagnant growth. Huya's stock price, which peaked at $36.33 per share in early 2021, has also fallen by 90%.