Douyu International Holdings Ltd (DOYU) 2021 Q3 法說會逐字稿

Good morning and good evening, ladies and gentlemen. Thank you, and welcome to DouYu International Holdings Limited Third Quarter 2021 Earnings Conference Call. (Operator Instructions) I will now turn the call over to the first speaker today, Lingling Kong, IR Director at DouYu. Please go ahead.

Thank you. Hello, everyone. Welcome to our Third quarter 2021 Earnings Call. Joining us today are Mr. Shaojie Chen, Chairman and Executive Officer; Mr. Mingming Su, Chief Strategy Officer, and Mr. Hao Cao, Vice President of Finance. You can refer to our financial results on our IR website at ir.douyu.com. You can also check a replay of this call when it becomes available in a few hours on our IR website.

Before we start, please note that this call may contain forward-looking statements made pursuant to the safe harbor provision for the private securities litigation reform act of 1995. These forward-looking statements are based on management's current expectations and observations that involve known and unknown risks, uncertainties and other factors not under the company's control, which may cause actual results, performance or achievement of the company to be materially different from the results, performance or expectations implied by these forward-looking statements.

All forward-looking statements are expressly qualified in their entirety by the cautionary statement, risk factors and the details of the company's filing with the SEC. The company undertakes no duty to revise update any forward-looking statements for selected events or circumstances after the date of this conference call.

I will now speak on behalf of our Chairman and CEO, Mr. Shaojie Chen.

[Interpreted] In the third quarter, we made solid progress in exploring new growth drivers for user traffic and revenue generation, while maintaining steady development of our core businesses. Total net revenues were RMB 2.35 billion and quarterly average paying user count reached 7.2 million. Notably, our average mobile MAUs for the quarter sustained the growth momentum from the previous quarter, reaching 61.9 million, representing a 3.9% year-over-year growth.

2 key factors drove our continued year-over-year growth. First, as mentioned in our last earnings call, we continued to benefit from the broadcast of several large-scale eSport tournaments, such as the LPL Summer grand final 2021. This forecast not only attracting new eSport users, but also galvanized inactive users to return.

Second, we deepened our collaboration with top-tier game developers, while also increasing our investments in new game content. In the third quarter, we partnered with a wide range of developers to bring more meatier and the long-tail games to our platform, while strengthening our promotional and operational efforts on this new game.

For example, during the quarter, we introduced 2 mobile games, including Battle of Golden Spatula and Harry Potter: Magic Awakened. Through a series of content and operation related activities, we collaborated with game developers in the launch and marketing spaces for this game to increase user awareness. By recording costumers to create quality content for this game, we effectively highlighted each game's features utilizing various game formats, successful attracts many light and moderate gamers to our platform.

Now turning to our content updates. The solid foundation of our comprehensive content ecosystem underlies our user base expansion. In the quarter, we continued to enrich our highly comprehensive content library with expanded game genres, generate personalized content for each game to cater a widely offered user needs, refine our platform operations and cultivate a wide range, game-centric content communities follow users.

To elaborate in the domain of large-scale eSports tournaments, we retained our close partnerships with developers, continuing to provide high-quality eSports content, and fostered growing as action between our customers and our eSports content. Focusing on live forecasting as a core operation for large scale eSports tournament, we provided multichannel live sessions and in-house produced the PGC content to meet the wide viewing needs of our users.

In the quarter, we forecasted over 60 large scale eSports tournaments and produced over 78 eSports tournaments in-house. Notably, we broadcasted the LPL Summer 2021 tournament, which is the highest level League of Legends professional tournament in China with related content produced in-house.

On the mobile front, we successfully attracted new mobile users through incentivized operational and marketing initiatives. Moreover, for the Peacekeeper Elite League 2021 Season 3 tournament, officially the is a highest level professional Chinese league. We invited a number of influencers who are also our Peacekeeper Elite streamers to participate in the tournament coverage and analysis to put streamer user interaction and improve the overall viewing experience.

Meanwhile, for the CFML Summer 2021 Tournament, a professional league for Crossfire Mobile, we work with game developers to launch promotional programs, featuring high-value in-game items to drive user growth, emulate user engagement and improve the viewing experience.

Furthermore, we attracted and retained new users and galvanized the routine of all users through a number of marketing campaigns and related [copy] exposure on our self-produced e-sporting events. Such as League of Legends, China versus South Korea. During this large-scale eSports tournament, we also incorporated an on-demand playback function and produced a series of relevant video clips, graphics and community discussion to further enhance the user engagement in the non-life forecasting conference.

For non-eSports games, we endeavor to cover more game genres. Even cooperation with more game developers and strengthen the operation of each game's lifecycle. Given that non-eSports gaming content is better viewed in the graphic and video format. We upgraded our product features with content integration of live streaming, videos, graphics and community interaction to attract more high-quality gamers and content produces to our platform.

In addition, we continue to refine our operations hold relevant event on hard topics and guided interactive discussions among developers, steamers, content creators and users. Through our high-quality content and optimized product features, we are able to meet various user needs for entertainment, learning and interaction, thus attracting more users to our platform.

More importantly, we have made good progress in tailoring our operating strategy for each segment, including live streaming, video, graphic and community, especially for our originally launched non-eSports game. For example, our flagship game launched in the last quarter, NARAKA: BLADEPOINT, retained its growth trajectory in the third quarter, showcasing high user thickness on our platform.

For other new games launched during the quarter, Battle of Golden Spatula and Harry Potter: Magic Awakened also performed well, as a result grew user engagement and increased live streaming volume. These improvements are a result of our continued commitment to cultivating and supporting top-tier streamers, customizing content offerings, optimizing our segment operations and upgrading our platform with more interactive product features.

During the quarter, to augment our content production efficiency, we committed additional resources to our research and development capabilities. For example, in third quarter, we launched a new content production tool and one-click video production function in the live streaming room on our website. With these 2, user can easily edit the latest 2 minutes of a live streaming session and automatically upload the edited content, to our video and community segments. We expect that this updates will increase UGC content creators in CSM and stimulate interactions within our committee.

Going forward, we will continue to execute our game centric content ecosystem strategy. We will continue to enrich our offerings of game content to meet the diversified needs of our users. And attract more users through our refined operation of new and existing popular games.

Now turning to monetization. In the third quarter, our quarterly paying users totaled 7.2 million, with an ARPPU of RMB 307. We were able to sustain the size of quarterly paying users as we continue to execute our proactive offering strategy to improve user engagement and paying user consumption.

We also keep exploring new monetization methods, while maintaining stable revenue contribution from the traditional virtual gifting model. Let me also touch briefly on our development in overseas markets.

Mildom remained one of the top ranking mainstream videogame live streaming apps in Japan for the last 2 quarters, according to App Annie. Given that the user base is achieving scale, we enhanced the Mildom commercialization during the quarter and made meaningful progress. In the future, we will forward solidify our market position in Japan and strengthen the monetization capabilities of Mildom, while optimizing operational efficiencies to maintain healthy growth.

In summary, during the third quarter, we made firm headway in exploring new growth initiatives while maintaining the steady development of our core businesses. Building on our industry leadership in live streaming, we deepened our collaborations with game developers in multiple dimensions. And provided gamers and users with comprehensive game content offerings, combining live streaming, videos, graphics and interactive communities, leveraging our competitive strength in paying user consumption and virtual gifting. We will continue to explore diversified monetization models and improve our financial performance through effective product development, streamer engagement and content operations.

With that, I will now turn the call over to our Vice President of Finance, Mr. Hao Cao, to go through the details of our financial performance in the quarter.

Thank you, Lingling . Hello, everyone. Covenant revenues in the third quarter of 2021 were RMB 2.35 billion. Live streaming revenues were RMB 2.21 billion compared with RMB 2.35 billion in the same period of 2020.

Our live streaming business remained relatively stable and our long term sustainable operating strategy. The year-over-year increase in live streaming revenue was due to several notable fan engagement events we launched in the summer of last year, led to the increases in paying user conversion, resulting in a higher revenue base in comparison. This decline was partially offset by organic growth of average revenues per paying user, driven by implementation of more effective operational strategies.

Advertising and other revenues were RMB 107.5 million compared with RMB 197.8 million in the same period of 2020. The year-over-year decrease was primarily due to trial testing of our new commercialization model with a portion of our advertising traffic instead of monetizing our traffic through traditional advertising channels. As a result, we forfeited some potential short-term revenue gains to improve sustainable long-term growth.

Cost of revenues in the third quarter of 2021 decreased by 5% to RMB 2.07 billion from RMB 2.18 billion in the same period of 2020. More specifically, revenue share fees and the content costs decreased by 5.6% to RMB 1.84 billion from RMB 1.95 billion in the same period of 2020. The decrease is mainly in line with the decreased live streaming revenues. This decrease was partially offset by higher spending on eSports tournament forecasting rights and additional investments in proprietary content production as we continue to invest in high-quality gaming content.

Bandwidth costs in the third quarter of 2021 decreased by 3.4% to RMB 163.4 million from RMB 169.1 million in the same period of 2020. This decrease was mainly due to lower unit bandwidth costs, which benefited from our improved procurement efficiency with major suppliers and partly due to lower bandwidth usage cost as a result of the continued technology upgrades in-house.

Gross profit in the third quarter of 2021 was RMB 278.5 million compared with RMB 369.4 million in the same period of 2020. Gross margin in the third quarter of 2021 was 11.9% compared with 14.5% in the same period of 2020. This decrease was primarily due to the decline in revenues exceeding the decrement of revenue sharing fees and content costs.

Sales and marketing expenses in the third quarter of 2021 were RMB 218.9 million, an increase of 36.6% from RMB 160.3 million in the same period of 2020. This increase was mainly attributable to the increased costs from utilizing additional promotional channels for user acquisition.

Research and development expenses in the third quarter of 2021 for RMB 123.2 million, which represented an increase of 12.4% from RMB 109.6 million in the same period of 2020. This increase was primarily due to increased investment in technical personnel to continue our overseas expansion and technology infrastructure upgrades for enhancing our user experience.

General and administrative expenses in the third quarter of 2021 were RMB 86.5 million decreased by 8.1% of RMB 94.2 million in the same period of 2020.

Adjusted loss from operations in the third quarter of 2021, which adds back share-based compensation expenses, was RMB 91 million, compared with an adjusted operating income of RMB 71.2 million in the same period of 2020.

Net loss in the third quarter of 2021 was RMB 143.5 million, compared with a net income of RMB 59.6million in the same period of 2020. Adjusted net loss in the third quarter of 2021, which excludes share-based compensation expenses, share of income in equity method investments, and impairment loss of investments, was RMB 72.7 million, compared with an adjusted net income of RMB 98.7 million in the same period of 2020.

For third quarter of 2021, basic and diluted net loss per ADS were RMB 0.37 and RMB 0.37 respectively. Adjusted basic and diluted net loss per ADS were RMB 0.16 and RMB 0.16 respectively.

As of September 30, 2021, the Company had cash and cash equivalents, restricted cash, short term and long term bank deposits of RMB 7,078 million, compared with RMB 7,622 million as of December 31, 2020.

We would also like to provide an update on execution of our share repurchase program announced on August 30, 2021, in which the company may repurchase up to USD 100 million of its shares until August 30, 2021. As of September 30, 2021, the company had repurchased an aggregate of USD 4.3 million worth of its ADSs under this program.

Going forward, we will continue enhancing our monetization capabilities, while further improving our monetization efficiency. Additionally, as we continue to grow, we will focus on further utilizing our operating leverage to support the sustainable development of our platform. This concludes our prepared remarks for today.

Operator, we are now ready to take questions.

(Operator Instructions) Our first question is from Lei Zhang of Bank of America.

(foreign language) 2 questions here. First on regulation of funds. Do you see an impact from the suspension of game approval process recently? And how should we look at the regulatory change going forward?

Secondly, mainly on cooperation we hold the agencies, do we see the increased competition in the live streaming whole set? And any impact from the increase of revenue sharing ratio across your major peers. And how should we look at our revenue sharing ratio going forward.

(foreign language)

[Interpreted] Okay. First, for your first question regarding the suspension of new games -- the loss to new games. The short answer to that is we have not seen any significant impact on our existing users. Okay. In terms of regulation, there are 2 -- one is the suspension we've seen in the launch of new games currently, and this other one is actually content moderation.

For the first, the suspension of new game launches its -- actually it will -- can have a slower impact on the new user acquisition. For us, if we are seeing the approval of new games is not on hold rather than the suspension is actually caused by stricter standards for approval of new games, which we believe there will be more kind of high-quality game launched to the market, which will be beneficial for us and for the whole gaming industry in the long run.

Recently, the quality of the new games launched on our platform actually is very high, such as Battle of Golden Spatula, we have seen quite encouraging operations over there. So for the -- the other is the content moderation, content management, especially regarding the kind of games we don't have the approval to distribute domestically. And for that, we will gradually adjust our content offered on the platform to ensure that -- to ensure on one hand -- to ensure the quantity of the game. On the other hand, we will make sure that those contents are fully complied with current regulations.

Regarding to your second question on the competitive landscape on the consumer resources, actually, currently the streamers under contract with us will not be affected by other competitors in the industry raising their sharing -- revenue sharing percentage. Of course, we have seen that. The first is the number of private streamers available in the industry is quite limited. So it is very hard for new entrants to establish a similar kind of ecosystem that is -- can be competitive with existing platforms.

And the other thing is that since the streamers are far from moving between platforms under current contracts. So we are seeing that the current competitive landscape for streamer resources remain quite stable. So it is -- so in the light of all the factors above, other platforms will not be able to attract high quantity streamers nearly by increasing their revenue sharing fees.

And especially in terms of promoting new games, we actually collaborate with game talent agencies to recruit a large number of streamers to ensure we have the quality and quantity of new game content offerings for each game segment. So we -- and we have the -- we lot of operational knowhow and big data analysis to devote resources to those new streamers and help them to become the top streamers for our new game segment.

In terms of revenue sharing percentage, actually, we offer steady incentives to streamers during some promotional periods. So therefore, the overall revenue sharing ratio may fluctuate from quarter-to-quarter. However, we believe that our current revenue sharing ratio is reasonable, and we will adjust it according to the industry dynamics going forward. Thank you.

The next question is from Thomas Chong of Jefferies.

(foreign language) I will translate the question. We are seeing the online video platform, short form video are also investing in the live streaming deserve. So just want to see how we should think about the competitive landscape and also how we can meet the market going forward?

And my second question is, with regard to the newly launched games in the market, which one are we seeing doing better? And any data can be shared.

(foreign language)

[Interpreted] Thank you, Thomas. And for both questions is that we have a same rate since the first quarter of this year. We do not see significant changes in terms of the competitive landscape in the game live streaming industry. Everything the streamers are prohibited moving between platforms under contract period, the competition in the industry has remained quite kind of stabilized.

So we have seen that short video platforms have been expanding into the game live streaming sector, which has generated more traffic for the sector. We believe this will attract a more diverse user group to eSports and enlarge the potential market size for the entire game live streaming industry. So on top of this, we upgraded our content -- our content ecosystem, including video and communities and established a quite comprehensive content library, covering a wide range of game genres.

So our advanced strategy is to establish a game centric content ecosystem. So elaborating our index understanding of the gaming industry and which experience accumulated over the past few years, we will continue to engage our games' content offerings, cultivate a vibrant game centric content community and then attract more users to our platform. So we will continue to deepen our cooperation with game developers to cover more game genres, expanding our content coverage with young eSports tournament to cover non-eSports games. And we aim to build an integrated content channel for each the game we operate. We believe that by enhancing the interactions between users and content creators on our platform and by offering more high-quality content, we will enforce our leadership position in the game centric integrated content platform in China.

Let me answer your second question. We have over a strong momentum for a number of games this year, including NARAKA: BLADEPOINT, launched in July; Battle of Golden Spatula, launched in August and Harry Potter: Magic Awakened, launched in September. In the months following their launches overall live streaming volume and the user engagement increased by more than 100% month-over-month.

These games continued to perform well and are steadily gaining popularity and improvement in rank among our games on our platform. Especially NARAKA: BLADEPOINT became a top 10 platform game in (inaudible), total user time spent in live screening during the third quarter.

In addition, we are at the forefront of our industry in terms of the number of top streamers live streaming volume and user engagement for these new games. We enhanced the operations of each game segment and enriched our complete offerings by integrating live streaming with the players and 0 graphic surrender rates trying to meet user needs.

We leveraged our top 3 market tools for the anticipation and excitement among targeted consumers prior to the launch of these new games and recruit new streamers to ensure the quantity and the quality of continued offerings. And at the same time, we fully leverage each game to better, to increase user engagement. For example, we promoted the Harry Potter IP-related merchandise in order to attract some more IP fans.

Regarding the broadcasting of self-produced tournaments, we continued to offer higher quality PGC game content to our users by cooperating with professional event operators. Our premium PGC container offerings have not only enabled us to improving the viewing experience, but also gained recognition from game developers. In general, our operations for the full lifecycle of our games have generated us marketable result and attracted many new users to our platform. These results fortify our commitment to our operational strategy of offering diversified in centric content community. Thank you.

The next question is from Yiwen Zhang of China Renaissance.

(foreign language) I will translate. I have 2 questions. Firstly regarding the managing the low power. The title was launched in early October. How was this performance of our platform? And we think this year, what other large titles do you expect that were peer reviewed? And then secondly, on the LoL World Championship S tournament, how do you see its performance this year in terms of the operation metrics or revenue contribution.

Let me answer your question for the first question about LoL mobile. We have accumulated results and experience from our operations on LoL's PC version over the past years. On top of this, we believe our integrated operation approach for LoL will be beneficial to our overall operations for LoL mobile. For the users of LoL PC version are the first batch of users for its mobile version.

At the same time, operations of LoL over the past several years, we have maintained a conversion rates from LoL PC players to our users at a high level. This is a clear reflection that LoL is highly suitable for live streaming. The launch of LoL mobile will further galvanize the return of older players to watch related gaming content on our platform. Given the easier to play versions of all mobile, we expect a small views of LoL related game content on our platform as a number of players continued to increase.

And the second, we have a large pool of high-quality LoL streamers. On one hand, our top streamers from LoL PC segment, live streaming LoL Mobile games will generate traffic for the mobile version. On the other hand, our game streamers pool allows us to quickly cultivate streamers internally for LoL Mobile and generate premium gaming content more efficiently.

In addition, our long term collaboration with Tencent allows us to effectively integrate our promotional efforts with LoL show content and activity. Thus enjoying an advantage in the promotion and operation of LoL mobile. Based on our advantages mentioned above, we started cooperating with game developers, streamers and video creators during the testing which are both LoL Mobile in order to bolster anticipation and excitement among targeted consumers.

And additionally, we coordinated premium streamers and video creators to generate PGC content and gaming related hot topics to strength our leading position in the operations of new game. The popularity of LoL Mobile has continued to increase since its launch in October. Thanks to our power division and support of top streamers, the integrated operations of our live streaming video and graphic content, unapparelled promotion in association with S11 LoL World Championship and a series of sales product content such as LoL total master tournament. We achieved strong growth momentum for LoL Mobile since its launch in terms of live streaming volume and duration as well as user engagement.

And I have mentioned S11 and yours questions about S11. The S11 is LoL World Championship is the largest LoL official annual tournament and has always attracted a large number of viewers. LoL has always been a strong segment of ours, and we have an in-depth resources of well-known streamers and multi-based streamer and content ecosystem for this segment.

For S11 this year, we fully leveraged our Rage content resources to provide live streaming content in various formats and related programs. Based on the core broadcasting of tournament and official promotional events, we incorporated an on-demand playback function and produce a series of relevant video chips, graphics and community discussions. In addition, we provide more viewing formats, including horizontal viewing positions for the community of mobile users. Our promotional initiatives have improved the user engagement for the tournament, optimized viewing experience and attracted more premium users to our platform.

We also achieved a significant progress on creating seamless between tournaments and LoL games [store] broadcasting and operations of S11. Leveraged on high warranty streamer resources as the platform gravitate of larger user base and high level of user engagement. We successfully encouraged a game platform user to play LoL again and galvanize in active LoL gamers to retain.

The total viewing time for S11 tournament reached 1 billion. The viewing time for our in-house produced programs was over 117 million. More (inaudible) total interactions on our S11 communities surpassed 100 million times, demonstrating that our various contender becomes more appealing to our users.

Next question is from Qi Chen from JPMorgan.

(foreign language) I will translate myself. I'll ask 2 questions on behalf of Daniel. First, you mentioned that the company is seeking additional ways to diversify monetization by leveraging some traditional advertising resources. Can you give us some more color on the current progress and your expectations on that? The second question, can you brief us on the progress of the $100 million share repurchase program.

The first question, we generate advertising revenue by offering game and brand advertising to advertisers. Our brand advertising revenue has remained relatively stable, driven by stable user traffic on platform. We have explored implementing new monetization model on certain game advertisement resources. On the traffic side, we sacrificed a portion of our advertising revenue to reallocate some of our advertising balance and commercial live streaming resources for our new monetization model. On the advertiser side, we selected some premium advertisers and cooperated with to explore new monetization opportunities.

Regarding the new monetization model, we established a smart distribution system for new games by connecting game developers with live streamers. Game developers are able to release promotional campaigns on our platform, while live streamers can choose their preferred promotional method. By implementing this smart distribution system, we hope to boost advertising effectiveness in game downloads and activations. And we have rolled out a number of initiatives to support this goal.

First, we have developed a variety of handy clapping extensions within the system to support our live streamers as they encourage users to download and activate games. Second, we have motivated our streamers by implementing incentive plans directly connected to promotion effectiveness. Third, we have attracted more live streamers to join us by promoting case studies and offering systematic training.

Plus we have leveraged our [AGRM] capability to facilitate batching, pricing and distribution between game resources and live streamers traffic. So if this model develops well, we believe it will enable us to better leverage user traffic on platform and showcase streamer inhibited attitude. Better capturing the traffic [cash then]. Development of this model will enable us to generate more value for game developers and diversify income sources for live streamers. Eventually, the smart game distribution system will allow us to unlock higher monetization potential.

With respect to the repurchase of various series, we announced USD 100 million share repurchase program for a period of up to 12 months. As of September 30, 2021, we had repurchased USD 4.3 million worth of ADS on the open market. We started the share repurchase immediately after announcement and have been actively executing the program.

As required by regulation, we also -- we have also appointed professional institutions to execute our share repurchase schedule, subject to current market conditions. We will continue to provide updates on the audit cost in the coming quarters.

The next question is from Alex Poon of Morgan Stanley.

(foreign language) My first question is regarding our cloud gaming business. Can we get some update on our future expectations for the business? And second question is regarding our overseas business. How is the performance in third quarter? And what do we expect going forward.

Let me answer your first question about the cloud game. After more than a year of our exploration with our partners (inaudible) product centers of our cloud game are now largely complete. In the third quarter, we have also continued to update the product features of Grand Theft games for the Android mobile version -- mobile platform. We believe that cloud gaming is a new development opportunity for the gaming industry. However, it's not center stage limited by a number of issues such as copyright, culture and game capability. As game centric contender platform, it's well positioned to capture the opportunities of the development of the cloud gaming industry.

(foreign language)

Mr. Chen will address the questions regarding the development of overseas markets.

[Interpreted] For the overseas market, it's actually -- our strategy is to acquire the traffic before monetization. Over the past few quarters, our domestic business in China has been profitable, which means the majority of our investment has been made overseas, especially in Japan. According to App Annie, Mildom has remained -- has remained the top video game live streaming apps in Japan for the last 2 quarters. And the user size has been developing and sustainable at a very healthy level.

Since actually, May this year, actually once (inaudible) user site in Japan, we actually prioritize our strategy from user accumulation to traffic monetization. Going forward, we will further enhance monetization capabilities and narrowing -- gradually narrowing our losses. So as such, in the third quarter, we have continued improving our operational efficiency and successfully reduce our losses in the overseas market.

The next question is from Ritchie Sun of HSBC.

(foreign language) Let me translate the question myself. First of all, can you update us on the video and community features? What's the update? And also, when the did that contribute more in terms of MAU? Second question is, can you just comment on the content cost trend in this quarter? And what -- how will it trend going into the future.

(foreign language)

Mr. Chen will address the first question.

[Interpreted] Regarding the video content development and community building, actually are part of our content diversification strategy derived from our competitive strength in traditional live streaming businesses. The competitive nature of eSport games makes live streaming the ideal distribution channel to present the excitement of the content and ensure the continuous content offering in order to satisfy the viewing needs of its for users. However, for non-eSport game, live streaming is not the best delivery channel to -- for our users. Instead, videography content and communities are more simple forms of media to provide content such as game guides, tutorials, premium videos and participation in game related activity. So therefore, we have and will devote additional resources to videography content and communities for non-eSports games, while maintaining our advantages in the traditional eSports segment.

As you know live streaming videography content and communities are all interconnected as part of our content ecosystem. We aim to create a separate segment for each game on our platform. We will also cooperate with game developers to develop more comprehensive campaigns and quality content in all content format. We aim, we're committed to offering more diversified content to satisfy the various needs of our users and intend to attract and sustain more users to our platform.

About your second question, in Q3 2021, content costs increased on a year-over-year basis mainly driven by spending forecasting for eSports tournaments, especially LoL. Additionally, we made further investments in PTC content production as we continue to execute our game centric content strategy. So looking ahead, given that pricing for the rise of major LPL tournaments had already been determined and that we have managed to control the cost of our self-produced programs. We expect costs associated with these both tournament as a rise and our self-produced content to remain rather stable for the foreseeable future. Thank you.

On behalf of the management, thank you for joining our call. We look forward to speaking with anyone next -- everyone next quarter. Thank you.

That concludes the call today. Thank you, everyone, for attending. You may now disconnect.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]