Restart life

Chapter 551, page 0539: [Like a strong man beating a child]

While Chen Guiliang was giving training to his employees in the United States, Youke's investment department was in contact with Twitch.tv.

With so much money spent by Youke to lure top streamers to Twitch, how could they possibly be doing all the work for Twitch for no reason?
Twitch.tv's parent platform is Justin.tv.

In 2007, Justin Kane founded Justin.tv, a general-purpose live streaming platform. It raised $120 million in seed funding, $800 million in Series A funding, and $1000 million in Series B funding.

During the course of his business, Justin discovered that the game live streaming channel he had unintentionally created was rapidly gaining half of the traffic on Justin.tv.

So in June of last year, he spun off the gaming channel, and Twitch.tv was born.

"Mr. Chen, the other party does not accept equity financing."

"They don't lack money?"

“They are in dire need of funds. But they have a high self-esteem and believe they can make money quickly. So they only accept debt financing.”

"They just want to charge a premium."

"The premium is outrageously high!"

"How many?"

“We valued them at $4000 million, but they valued them at $1 million! As far as I know, many venture capitalists approached them, but they were all scared off by this outrageous valuation.”

“Talking about under $8000 million.”

"Mr. Chen, they are not worth $8000 million at all."

"Next year it will definitely exceed $1 million. Their competitors keep making mistakes. Even if they do nothing but maintain the current user experience, they will soon become the largest game streaming platform."

"Alright, I'll talk to them again."

Venture capitalists, whether in China or the United States, have not truly realized the value of game live streaming platforms.

According to Chen Guiliang, Twitch.tv is already worth over $1 million. However, when venture capitalists try to value it, the valuation is at most $5000 million, and some even as low as $3000 million.

This has led Twitch's owner to completely reject equity financing.

However, Twitch.tv was in a phase of rapid growth, and the company was facing severe financial difficulties. In another timeline, Twitch opted for debt financing in 2012, preferring to pay high interest rates rather than relinquish shares.

Until 2013, when its competitors were on the verge of collapse, it became the largest game live streaming platform in Europe and America, and its valuation grew to $8000 million.

By 2014, its valuation had increased tenfold, and it was acquired by Amazon for a record $9.7 million (this deal stimulated the capital boom in China's live streaming industry).

In other words, Chen Guiliang is now investing in Twitch.tv at a super premium, and even if he waits two years to sell, he will still have a return of more than 10 times.

The financing negotiations between Youke and Twitch were finally completed at the end of September.

The contract details are roughly as follows:

First, Youke invested $2000 million to acquire a 21.05% stake in Twitch.

Secondly, Youke exclusively licenses (European and American streaming rights) its various games to Twitch. Youke's licenses to other streaming platforms automatically terminate upon expiration and cannot be renewed.

Third, in the next six months, Twitch will push streams to streamers playing Oracle Era.

……

In 2012, Steam did not have a dedicated category for free games.

But one day in early September, many users were surprised to find that a game on the Steam homepage was labeled "permanently free".

Can you get it for free?
No matter what game it is, just click into it first.

Within a few days, the comment section of "Oracle Era" became lively.

"What kind of game is this? It's permanently free, and it's even featured on the Steam homepage."

"It's a MOBA game that's already very popular in Europe. But I never expected it to partner with Steam."

"Is it fun?"

"I'm Korean, believe me, OE is really fun. This is our Korean game, and it has already beaten LOL!"

"WTF? This isn't a Chinese game? When did it become Korean? (This comment is in Chinese)"

"..."

In 2012, many Chinese gamers were already using Steam, but far fewer than they would be later.

At this time, Steam had 40 million active users, of which about 40% were from North America and 4000% were from Europe.

The contract that GamerSky negotiated with Steam is based on a tiered payment scheme, where North American users pay the full price for downloads, while users in other regions pay half price.

In regions like South America and the Middle East, where servers for "Oracle Era" haven't been set up yet, users downloading the game don't have to pay Steam a single penny.

Promotional activities on platforms such as Facebook and Twitter are also underway at the same time.

While the number of registered users of "Oracle Era" in North America did not surge as a result, it saw a significant increase every day, and the seven-day retention rate was quite good.

Until Youke completed its investment in Twitch, the number of streamers broadcasting "Oracle Era" increased visibly.

One veteran top streamer of League of Legends even switched to the Twitch platform after being persuaded by Own3D.tv and the company, Yuke, due to long-term wage arrears.

This top streamer, while continuing to stream League of Legends, occasionally streams Oracle Era: "Brothers, the LOL servers are on fire again. I heard there's a similar game called OE. How about we try OE together today?"

The live stream chat was full of people criticizing Riot Games, much like how Chinese gamers criticize Tencent.

At this time, the North American servers of "League of Legends" will frequently experience high latency and random disconnections during peak hours, after maintenance or patching.

This was jokingly referred to by North American players as "the server caught fire," "patch day fear," and so on. GamerSky wouldn't allow popular League of Legends streamers to simply stop playing the game. Streamers need viewers too!
We need to take advantage of the Riot Games servers being down to have popular streamers "try" playing other games with their viewers. Viewers will be more receptive to this.

"This is OE? It looks similar to LOL."

"It's much prettier than League of Legends."

“I’ve seen it recommended on Twitter.”

There are also gameplay videos of OE on YouTube.

"..."

This top League of Legends streamer pretended to be a newbie to Oracle Era, leading viewers through the beginner quests and then playing two more match games.

The streamer solemnly commented, "OE is a pretty good game; it can be used as a substitute for LOL. When Riot's servers are unstable each week, you can use OE to pass the time. Okay, let's go play LOL now..."

After a while, the streamer started cursing: "Why is LOL so laggy? Doesn't Riot know how to upgrade the servers? Fuck! Guys, let's go play a couple more rounds of OE."

Many streamers who receive hefty rewards from game developers specifically target the "menstrual cycle" of League of Legends servers, leading players to play League of Legends together. Then they start swearing and go off to play Oracle Era.

Repeating this several times will leave many viewers with the preconceived notion that Riot Games' servers are incompetent.

And indeed, that didn't work.

Riot Games' early self-operated servers all looked like this. Chinese players were much luckier; under Tencent's operation, the servers were more stable, and the skins were more attractive.

The main reason for this phenomenon is that there is a problem with the technical architecture of the game!
To save money during its rapid expansion, Riot Games adopted a monolithic architecture, making the system resemble a tightly coupled, monolithic ball. A problem in one area affects everything, making localized scaling and rapid repairs difficult. The storage and retrieval of massive amounts of player data, match logs, and other information can encounter significant bottlenecks, leading to slow matchmaking, login failures, and game crashes.

Weekly patch updates are particularly problematic, with a whole host of issues, making it common to find the game unplayable the day after an update.

Why doesn't Riot Games fix this?

It'll cost a lot of money!

Moreover, the money must be invested in stages to resolve the problems left over from the initial attempt to save money.

The first phase requires firefighting-style expansion, involving huge investments in purchasing more server hardware and expanding data centers. However, this can only alleviate the current situation.

The second phase involves scrapping the previous technical architecture and building a new, more advanced one.

The third stage is the cloud technology that was later used.

Riot Games is currently in Phase 1 and is working on Phase 2.

Previously, there were no competing products for "League of Legends", and the launch of "Oracle Era" was ignored by everyone, so players could accept the occasional server lag.

Now, Oracle Era has seen a surge in exposure, with information about it appearing everywhere from Steam to Facebook, Twitter, YouTube, and live streaming platforms.

Players suddenly realized, "I have other options!"
Initially, there wasn't a large-scale "defection" of League of Legends players in North America. They simply switched to Oracle to pass the time when Riot's servers were unstable.

Gradually, some players stayed.

Because Oracle Era has prettier graphics, a more user-friendly matchmaking and ranking system, and more stable servers... why the hell would I go back to playing League of Legends?
This gradually created a virtuous cycle, with more and more players enjoying "Oracle Era" and more and more discussions about "Oracle Era" in online communities, which in turn led to a surge in related live streams and videos.

Of course, this is a long-term process of ebb and flow.

Because League of Legends is deeply rooted in North America and has a large number of die-hard players, its online player base in North America is something Oracle Age cannot quickly catch up to, even with the continuous loss of users.

The North American subsidiary of Youke plans to bring the number of online players in North America for "Oracle Era" to one-third that of "League of Legends" within the next four months.

But it seems... that we can achieve the first phase goal ahead of schedule.

Tencent should be aware of the situation in the North American market, but they haven't reacted at all.

Two or three years ago, Tencent discovered Riot Games' various problems and wanted to step in to help them compete with GamerSky. However, Riot Games, fearing that Tencent would take control of the company, refused Tencent's technical and personnel support and only insisted on continued investment from Tencent.

Tencent isn't stupid. After League of Legends lost to Oracle in the Chinese market, they decisively gave up on continuing to acquire Riot Games' shares.

During this period, Liu Zhiping also helped Tencent acquire a company in North America.

After returning to China, he asserted to Little Ma: "Fist is finished. In just one more year, Oracle Era will be able to take over the North American market. It's like a strong man beating a child. Fist is too soft and has no power to resist."

"What other moves does Youke have in North America?" Little Ma asked.

Liu Zhiping said, "Although Twitch.tv has not released any information, it should have received investment from Youke."

Pony Ma asked in surprise, "Didn't you also think highly of this platform?"

Liu Zhiping said, "I underestimated it. The owner of Twitch was not satisfied, and even with a premium of several million, we still couldn't reach an agreement."

Little Ma asked, "How much of a premium do you think Youke paid?"

Liu Zhiping said, "The premium may exceed 60%, or even 80%!"

Little Ma took a deep drag on his cigarette: "It seems Chen Guiliang is very optimistic about game live streaming. He's running a live streaming platform in China and investing in one in the US. It's time for us to get in on the action. I'm planning to create a Tencent Live platform."

Liu Zhiping nodded: "It can be done."

Pony Ma then asked, "Isn't Own3D.tv the number one live streaming platform in the US? How about we acquire that platform?"

Liu Zhiping said, "The management of this platform is extremely chaotic, and the fact that they owe streamers wages has ruined their reputation. Unless the entire management team is replaced, they will go under sooner or later. I have also had contact with them. They are taking advantage of their size to demand much higher prices than Twitch, and they are unwilling to give up control of the company."

“Then forget it,” Pony Ma said. “We will invest all our resources to build Tencent’s live streaming platform.”

Tencent can't succeed at everything it does. Didn't they fail when they made Tencent Mobile?
In another timeline, Tencent's foray into live streaming failed. Following this, they invested in other live streaming platforms, creating a mess, before finally restarting their plan to operate their own live streaming platform.

(End of this chapter)