Tencent Holdings, a Chinese social media and gaming giant, announced on April 7 that it would shut down its game streaming platform Penguin Esports by early June. This move shows its effort to streamline the businesses following a regulatory crackdown.
Tencent said the closure of the six-year-old platform is set to happen by June 7, citing a change of business strategy.
It will compensate users by offering digital coupons in games like League of Legends operated by Tencent-owned Riot Games Inc.
In 2020, Tencent planned to merge Penguin Esports with Huya and DouYu, the nation’s top two live game streaming sites that it held at least one-third ownership.
The merger promises to create a 10 billion dollar video game streaming giant, accounting for an estimated 80% share of the game streaming market in China.
However, Chinese regulators blocked the deal on antitrust grounds. They temporarily prevented Tencent from updating its mobile apps or launching new ones in November 2021.
Like Amazon’s Twitch, Tencent’s Penguin Esports hosts live streams of professional gaming tournaments and other video-related content. It is one of the world’s top online gaming companies, and it is actively pushing into the area of professional games, known as e-sports, for a potential new revenue stream.
The latest move is a blow to Tencent’s ambitions, which clashed with the government’s new regulations on addiction among minors and improper game content.
According to Reuters, amid Beijing’s wide-ranging tech crackdown, Tencent is looking for ways to cut operating costs. It is also preparing to cut 10-15% of jobs this year.