On the evening of November 21st, Douyu released a notice explaining the reason for the previous CEO Chen Shaojie's loss of contact. The announcement states that Chen Shaojie was arrested by the Chengdu police around November 16th. It is reported that the Douyu side has not received any formal notice regarding the investigation into Chen Shaojie or the apparent reasons for his arrest. The continued detention of Chen Shaojie and any subsequent legal proceedings and enforcement actions against relevant parties may have a significant adverse impact on Douyu's reputation, business, and business performance.
Affected by the above news, the Douyu market plummeted in front of the market, with a drop of over 10% at one point. As of closing, the stock's decline narrowed to 5.93% at $0.905.
According to public information, Chen Shaojie was born in Jinan in 1984. In 2010, he bought Station A, the originator of the "anime website" in China, and set up Station A's "live broadcast" channel. Four years later, he separated the "Live Broadcasting" channel from Station A and renamed it "Douyu TV". In the following few short years, Douyu made rapid progress and obtained investments from well-known capital such as Sequoia China.
In July 2019, Douyu was listed on NASDAQ with a market value of nearly $4 billion on that day. Chen Shaojie's personal wealth also skyrocketed. When the market value of Douyu was the highest, Chen Shaojie's personal value was close to 10 billion yuan.
It is reported that in early November, Chen Shaojie, Chairman and CEO of the Douyu Board of Directors, was reported to have been out of touch for nearly three weeks. Chen Shaojie's last appearance in public view was during the Douyu Q2 financial report conference call. At that time, he stated that Douyu had improved the platform's relevant rules and procedures, with the goal of achieving long-term development and actively cooperating with regulatory work in the future. At that time, the topic of "Douyu Confirming CEO Chen Shaojie Lost Connection" once topped the hot search list and sparked heated discussions. Some industry insiders speculate that Chen Shaojie's loss of contact may be related to gambling.
According to Pengpai News, there are rumors in the industry that Chen Shaojie's incident may be related to the "Changsha Rural Expendables" in the previous Douyu live broadcast room. According to public media reports, the "Changsha Rural Expendables" used various lottery rules for Douyu to engage in suspected gambling activities. Users can participate in a virtual currency lottery worth 1000 to tens of thousands of yuan by purchasing designated items within a certain period of time. The "Changsha Rural Expendables" then purchased virtual currency in equal amount through third-party channels such as Alipay or "backpackers" to cash in their bonuses.
It is reported that the live broadcast room often starts gambling and lottery at 10 pm. The "Changsha Rural Daredevil Team" also refers to gambling as the "10 pm Economic Class" and uses "start classes at 10 pm" as the public secret code. Many teenagers are addicted to it, suffering heavy losses and unable to extricate themselves. Some users made crazy bets of over 300000 yuan in the live streaming room within half an hour.
According to statistics from third-party live streaming data platforms, the "Changsha Rural Expendable Team" achieved a revenue of 177 million yuan and a daily turnover of 13.1767 million yuan in 2020. Among them, the highest income was in March, with a monthly revenue of 74.87 million yuan and a daily revenue of approximately 2.41 million yuan. The live broadcast room is also known as the "largest casino in Douyu" by netizens.
However, the "Changsha Rural Death Squad" has been exposed by multiple media outlets for gambling since 2021, and it is currently unavailable for journalists to search on Douyu platforms.
In addition, according to the data platform "Top List", the annual revenue of "Sending Nine Outdoor" reached 114.16 million yuan in 2020 after 117 days of suspension. This data is enough to quickly kill some A-share science and technology innovation board companies without revenue. On November 20, 2020, the three main members of "Sending Nine Outdoor" were taken away by the Hangzhou police. The court ruled that 339 used the Douyu live streaming platform to open a casino, and three people organized more than 4200 lottery draws, with over 4.42 million people participating. The act of "drawing money" amounted to nearly 120 million yuan, which constitutes the crime of opening a casino. According to law, the anchor Fu and Pan were sentenced to 6 years in prison, and their logistics and finance Zhou were suspended according to law. The three people were fined 1.65 million yuan together.
And this is just the tip of the iceberg for gambling in the Douyu live broadcast room.
It is worth noting that the review and management of live streaming content has always been a major operational challenge faced by Douyu and other live streaming platforms. Due to the existence of vulgar and pornographic content, live streaming platforms such as Douyu, Yingke, and Huajiao have all received rectification notices. On May 8 this year, according to the news on the WeChat official account of "Netletter China", the National Internet Information Office directed the Hubei Internet Information Office to send a working group to the Douyu platform to carry out centralized rectification supervision for a period of one month in response to serious ecological problems such as pornography and vulgarity on the Douyu platform.
The other side of the frequent rectification of live streaming content is that live streaming platforms such as Douyu are facing bottlenecks in traffic growth and the loss of top anchors. It is reported that several popular Douyu anchors have transferred to other platforms.
Affected by performance pressure, Douyu's stock price has also shown a continuous downward trend. On October 25th, Douyu announced that it had received a written notice from the staff of the NASDAQ listing qualification department due to stock price issues. The notice states that the closing price of Douyu for the past 30 consecutive working days has been lower than the minimum bid price requirement of $1 per share specified in the Nasdaq listing rules. Douyu will have a compliance period of 180 days, which means it will comply with the Nasdaq listing rules again on or before April 22, 2024. It is worth noting that as of now, Douyu has not released its third quarter financial report.