Chen Shaojie, the founder and CEO of the US-listed video game live-streaming platform Douyu International Holdings, has been arrested in Chengdu, Sichuan province, on charges related to operating a casino. This news, confirmed by Douyu on their website, has sent ripples through the business community, given the platform’s significant standing in the video game streaming industry.
Douyu, which has Tencent Holdings as a major backer, noted that its operations remain normal despite the CEO’s arrest. However, it acknowledged that this incident could potentially harm the company’s reputation and future business prospects. The company’s board and management are currently formulating contingency plans to navigate the uncertain terrain following Chen’s arrest and the ongoing investigations.
Speculations about Chen’s arrest started swirling around three weeks prior when Chinese media reports surfaced, suggesting that he had been held incommunicado since October. These reports insinuated that the arrest was linked to gambling-related activities streamed on the platform. The Paper, a Chinese media outlet, citing anonymous sources, reported that Chen’s involvement in gambling dated back over a decade.
Founded in 2014, Douyu quickly rose to prominence as one of China’s top video game live-streaming platforms, alongside its main competitor, Huya, which also has Tencent as a significant stakeholder. In 2021, a proposed $5.3 billion merger between Douyu and Huya was blocked by China’s antitrust watchdog amidst a broader regulatory crackdown on the internet sector.
Chen, a Shandong native born in 1984, has been an active figure in the gaming and video-sharing space. His previous ventures include a gaming platform called Zhangmenren and a stint as CEO of Acfun, a video-sharing platform. During his time at Acfun, he pioneered a live-streaming business that eventually evolved into Douyu.
In his last public appearance in August, during Douyu’s second-quarter earnings call, Chen emphasized the company’s commitment to content management and adherence to regulatory guidelines. This commitment has been tested in recent times, especially since the Cyberspace Administration of China conducted an on-site inspection at Douyu earlier this year. The inspection, which focused on addressing issues like pornographic and vulgar content on the platform, marked another instance of increased regulatory scrutiny over the video game industry and online content in China.
Douyu, which raised $775 million from its IPO in New York in July 2019, has seen its share prices fluctuate in the wake of these developments. The company remains under close watch by regulatory authorities, particularly after the National Radio and Television Administration’s ban on unapproved live-streaming of video games last year. Despite these challenges, Douyu maintains its commitment to regulatory compliance on its platform.
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