Good morning and good evening, ladies and gentlemen. Thank you, and welcome to DouYu International Holdings Limited's third quarter 2019 earnings conference call. At this time, all participants are in listen only mode. We will be hosting a question and answer session after management's prepared remarks. If you require operator assistance, please press star, then zero. Please note, the conference call is being recorded. I will now turn the call over to the first speaker today, Ms. Mao Mao, IR Senior Director of DouYu. Please go ahead, ma'am.
Thank you. Hello, everyone. Welcome to our third quarter 2019 earnings call. Joining us today are Mr. Shaojie Chen, Chairman and Chief Executive Officer, Mr. Mingming Su, Chief Strategy Officer, and Mr. Hao Cao, Vice President of Finance. You can refer to our third quarter of 2019 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 provisions 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 achievements 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 statements, risk factors, and details of the company's filing with the SEC. The company undertakes no duty to revise or update any forward-looking statements for selected events or circumstances after the date of this conference call. Now, I will read the prepared remarks on behalf of Mr. Chen. Overall, we sustained solid growth momentum in both our financial and operating results in the third quarter of 2019.
During this quarter, our total revenues increased by 81.3% year-over-year to RMB 1.86 billion, while gross profit increased by 460.5% year-over-year to RMB 316.8 million, implying a gross margin of 17%. Likewise, adjusted net income grew to RMB 72.2 million, representing an adjusted net margin of 3.9%. At the same time, our user base continued to expand with quarterly total MAUs increasing by 14.7% year-over-year to 163.6 million, among which mobile MAUs increased by 26.1% to 52.1 million. Quarterly paying users increased by 66% year-over-year to 7 million. The robust growth in mobile MAUs was attributable to three key factors. First, several world championship tournaments, including The International 2019, caused user traffic to flourish in both Dota 2 and other related segments during the quarter. These high-profile events also successfully re-engaged a significant portion of previously inactive users.
Second, the overlap of the summer holiday period during the quarter was conducive to a higher viewing frequency on mobile devices. Third, several new phone model launches during the quarter significantly enhanced our users' viewing experiences on mobile devices. In addition, our PC MAUs ramped up to 111.5 million, maintaining a steady growth rate of 10% year-over-year. The launch of games with mega-hit potential, including World of Warcraft Classic and Teamfight Tactics, also expanded users' number of viewing choices on both mobile and PC platforms, which further boosted both mobile and PC viewership in turn. Beyond user growth, we maintained high levels of user engagement and stickiness while keeping our average daily viewing time steady in the quarter.
Looking forward, with more and more gamers and esports players being converted into viewers of game live streaming and the coming launches of highly anticipated game titles, we are confident in our ability to sustain a long-term MAU growth. During the quarter, we continued to cultivate the vibrancy of our game-centric live streaming content ecosystem while expanding our content coverage across all segments of the platform. Notably, our game live streaming segment accounted for more than 80% of total viewership in the quarter. Meanwhile, non-gaming content effectively supplemented our game live streaming content, bolstering our appeal to a broader array of viewing preferences and accelerating our penetration into various user segments. On the esports front, we continued to explore both upstream and downstream segments of the esports value chain.
During the quarter, we self-organized and live-streamed over 50 tournaments as well as broadcasted over 70 large-scale esports events, such as CS:GO Major Championship and The International 2019. These events are quite in fashion with the esports community and helped us to attract a tremendous amount of game users. In addition to broadcasting esports events, we also signed several exclusive streaming partnerships with high potential esports teams, thus continuing to lay a solid foundation for the cultivation of top-tier game streamers and the distribution of premium game-centric live streaming content. Going forward, we will continue to explore different areas of the esports value chain for investment and further enhance our premium content to attract more esports users onto our platform.
In line with our curation of premium esports content, we also continue to refine our dual-track system of exclusive contracts and talent agency models to maximize the effectiveness of our streamer management network. For example, to increase collaboration with talent agencies, we were able to improve the operating and monetization efficiencies of mid-tier and long-tail streamers. By leveraging our close ties to this group of top streamers, we were able to develop premium content, amplify viewership, and increase user stickiness. We also continue to devote a substantial amount of resources to the discovery and cultivation of mid-tier streamers. Through our work with this deep pool of promising talent, we were able to diversify our live streaming content ecosystem, generate a constant stream of quality content, and accelerate the monetization potential of this streamer category.
Going forward, we will continue to deepen our cooperation with leading game developers and distributors, such as Tencent. Such collaboration will enable us to enrich our gaming-centric content offerings, seize the first-mover advantage for mega hit game launches, and facilitate a constant flow of premium esports content. Furthermore, we will also optimize our operating capabilities in each segment while refining our internal streamer management system, both of which will further boost our user conversion and accelerate our market penetration. In addition to content diversification, we also ramped up our monetization capabilities in the third quarter of 2019. Notably, our quarterly paying users increased by 66% year-over-year to 7 million, implying a paying ratio of 4.3% compared to 3.0% in the prior year period. Meanwhile, ARPPU increased by 10.4% year-over-year to RMB 337 million in the third quarter.
For our game live streaming segment, we continued to promote our fan system and small amount gifting through a series of innovative products and interactive features to enhance user-streamer interaction and stimulate users' willingness to pay. For example, in August, we launched the Super Fan Club as an extension of our existing fan system. The Super Fan Club was both effective and well-received by users, increasing users' engagement with the platform and paying ratio within the game live streaming segment. In our non-gaming segment, we continued to refine our premium membership system and increase our monetization efficiency by deepening our collaboration with talent agencies in the quarter. Going forward, we will continue to develop new ways of enhancing user-streamer interaction and accelerating users' consumption habits. As we move into the fourth quarter, we are increasing the frequency of major online user events from a quarterly to a weekly basis.
The combination of such weekly events like the Super Fan Club with several annual mega events like the YuLe Ceremony, enabled us to track user data and paying habits, cultivate user engagement, and adjust our operational strategies based on user behavior analysis in real time, thus significantly reducing systematic risk. Underlying all of our operational success is our ability to develop and implement technology on the frontier of progress. For example, during the quarter, as we continued to supercharge our AI and big data analytical capabilities, we passed along significant advantage to both streamers and talent agencies, empowering both parties with more comprehensive data-driven insights and boosted operating efficiency. Leveraging our strength in data analytics and modeling, we were able to target users within every phase of the game live streaming lifecycle, provide users with personalized recommendations, and sharpen the effectiveness of our precision marketing.
Notably, the 5G network technologies are accelerating the development of the game live streaming business, optimizing user experience, and enabling the creation of innovative business models such as cloud gaming. In light of these industry trends, we foresee immense growth potential within the game live streaming industry and are proactively laying the groundwork for its coming transformation. Going forward, we will continue to build out and refine our technology infrastructure to capitalize on these promising market opportunities. As we expand overseas, we are actively exploring the monetization potential of select countries such as Vietnam, where we have already secured a foothold in the market. Additionally, in Japan, we have also launched products and continue to maintain a healthy pace of progress. In summary, we are pleased that we made progress in the third quarter, augmenting our user base, forging our content ecosystem, and investigating innovative methods of monetization.
Going into the fourth quarter, we will continue to scale up our user base, stimulate deeper user interaction, curate more premium content, and implement additional products and features to meet a broader array of user demands. At the same time, we will remain steadfast in our dedication to improving our financial results and generating long-term shareholder value. With that, I will now turn the call to our Vice President of Finance, Mr. Hao Cao, to go through the details of our financial performance in the third quarter.
Thank you, Mao Mao. Hello, everyone. During the third quarter, we increased our total net revenues by 81.3% year-over-year to RMB 1.86 billion, and achieved solid growth in both our live streaming revenues and advertising and other revenues. Our gross margin expanded to 17% from 5.6% in the prior year period. We also improved our adjusted net income to a gain of RMB 72.2 million from a loss of RMB 214.2 million in the third quarter of 2018. Now, please allow me to provide you with some more details regarding our key financial metrics. Our total net revenues grew by 81.3% to RMB 1.86 billion, including RMB 1.66 billion in live streaming revenues and RMB 0.2 billion in advertising and other revenues. Live streaming revenues increased 83.0% year-over-year to RMB 1.66 billion as the monetization strategies proved to be efficient in enhancing user-streamer interactions and stimulating users' willingness to pay.
We also collaborated more closely with talent agencies to increase our monetization efficiency for mid-tier and long-tail streamers. Promotional demand from advertisers increased significantly. Notably, the increase in revenue from this segment mainly came from integrated advertisements as we work carefully to maintain our superior user experience. Cost of revenues increased by 59.4% to RMB 1.54 billion. More specifically, revenue share fees and content cost increased by 66% to RMB 1.31 billion. This increase was primarily driven by two factors. First, increased revenue share fees, which were in line with increases in total revenues. Second, increased investments in esports-related content rights and esports teams, expansion of self-organized tournaments and in-house content production.
The rise in content cost is in line with our belief that premier content is one of the key drivers for organic user acquisition, existing user retention, and user engagement level improvement. These increases were partially balanced out by the declining trajectory of sign-in bonuses used to secure top streamers with exclusively signed contracts, despite of a greater number of top streamers existing on the platform during the third quarter of 2019. Bandwidth cost increased by 6.1% to RMB 150.8 million, primarily due to higher traffic and user engagement on platform, which was partially offset by a lower unit purchase price and improved utilization efficiency in bandwidth during the quarter.
Gross profit increased by 450.5% to RMB 316.8 million, and gross margin expanded to 17% from 5.6% in the prior year period, mainly due to better operating leverage as a result of the company's continuous improvements in monetization, bandwidth utilization efficiency, and economies of scale. Let's turn into our operating expenses. Sales and marketing expenses increased by 18.6% to RMB 173.2 million in the third quarter of 2019. This change was mainly due to share-based compensation expenses recognized immediately following the company's IPO, as well as an increase in promotional and marketing expenses incurred to promote esports-related content while further strengthening both our leadership in esports market and brand awareness. R&D expenses increased by 47.2% to RMB 119.9 million, primarily driven by service compensation expenses and enhanced research and development efforts for various business segments. G&A expenses increased by 326.3% to RMB 232.9 million, which was also mainly due to share-based compensation expenses.
Share-based compensation expenses allocated in operating expenses accounted to RMB 228.2 million in the third quarter of 2019 as compared to RMB 4.4 million in the third quarter of 2018 and RMB 27.4 million in the second quarter of 2019. This sharp increase during this quarter was due to the successful completion of our IPO in July of this year, which was a significant non-cash charge. Other operating income net was RMB 11.8 million in the third quarter of 2019, compared with RMB 16.4 million in the prior period. Adjusted operating income, which excluded share-based comp ramp-up to RMB 30.8 million compared to an adjusted operating loss of RMB 203.7 million in the prior period. Adjusted net income, which excluded share-based compensations, expenses, share loss or income in equity method investments, and impairment loss of investment improved to a gain of RMB 72.2 million from a loss of RMB 214.2 million in the prior period.
Such an increase was mainly due to our enhanced monetization capabilities and improved operational efficiencies. Basic and diluted net loss per ADS was both RMB 0.59. Adjusted basic and diluted net income per ADS were both RMB 0.26 for the third quarter of 2019. Looking ahead, we expect our total net revenues for the fourth quarter of 2019 to be in the range of RMB 1,960 million-RMB 2,030 million. This forecast reflects our current and preliminary views on the market and operational conditions, which are subject to change. This concludes our prepared remarks for today. Operator, we are now ready to take questions.
We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Please say your question in Chinese first, then repeat it in English. Please limit yourself to one question and then know you can rejoin the queue for a follow-up. At this time, we will pause momentarily to assemble our roster. The first question comes from Hillman Chan of Citigroup. Please go ahead.
Hi, Chen Zhong, Steven Zhong. Thank you, management, for taking my question. Could management share more on your view on how the game live streaming industry has been evolving since third quarter, how we are thinking about the competition from Kuaishou and the other short video platforms as well as the competitive landscape in the future, please? My second question is on Tencent. Given their investments in the three platforms, Kuaishou, DouYu, and HUYA, are we seeing any preferential treatment in terms of the resources allocation from them? If Tencent were to exercise the rights in coming year to consolidate HUYA, how should we think about the chance of merging between HUYA and DouYu, please? Thank you very much.
内容群体。所以说我们认为新法器征之后会对斗鱼有更好的明显获益。
I'll translate for Mr. Chen. The industry competition landscape so far has not changed materially since the third quarter of this year. To date, we believe that Kuaishou's entrance into the game live streaming market has not posed any direct compete to our business. Instead, Kuaishou's presence has brought in a massive user traffic to the game live streaming industry, which we believe has both promoted the industry and also raised the growth ceiling. Such an injection of users has benefited the development of the entire industry as a growing number of non-game live streaming users are becoming the game live streaming users. It should also be noted that as a content platform, DouYu has the most premium game live streaming content, meaning that a higher industry ceiling will also significantly benefit DouYu's growth.
从用户群体的观点来看的话，我们与快手这种短视频平台的聚焦的游戏品类不同。我们作为斗鱼的直播平台的主要的用户的集中在硬核的电竞游戏，也是主要的重度游戏玩家。这批用户群体的质量好，而且用户黏度很高。另外一个，从整体的用户体验的角度来说，短视频平台提供的是一种即兴式的观看体验，与直播平台的这种完整的观看体验是有一定的区别的。因此，虽然快手可能会消耗一部分用户的市场，但是两者有本质的这样一个体验上的区别。所以我们认为快手对我们并不直接构成直接的竞争。
In terms of the user demographics, we believe that our users are different from Kuaishou or other short form video platforms, because as one of the leading platform in the game live streaming industry today, we are generating most of our user traffic from hardcore esports games, and the majority are coming from heavy game players. This group is of high quality, consisting of users who are highly attracted to our platform. In addition, from user experience perspective, the short form videos only present the highlights of an esports tournament.
While for us and other game live streaming platforms, we are providing users with complete viewing experience for the tournaments. These are quite different 2 type of viewing choices. We believe that although Kuaishou and other short video platforms might take up a small portion of user time, given the various differences we just mentioned between Kuaishou and us, we don't regard Kuaishou as a direct compete.
总的来说，我们认为这个游戏直播行业赛道还足够大，而且目前的渗透率仍然较低，我们相信这个行业的发展足够容纳多家公司一起把蛋糕做大。
In general, we believe that the live streaming industry is large enough to accommodate multiple companies, and its current penetration is still low, so we can work together to enlarge the size of the market.
第二个问题关于腾讯对于我们几家直播平台的资源上的分配情况。我们认为在游戏直播行业，我们是一直在深耕游戏直播行业这个领域，然后协助我们的重要伙伴，也是我们的重要股东腾讯，做好游戏的发行和推广，以及游戏用户的沉淀和回流。对于腾讯来说，我们认为最根本来说，与直播平台合作的首要目的就是推广新游戏和延长旧版游戏的生命周期。根据第三方数据，目前斗鱼仍然拥有全行业明显领先的流量优势，所以我们认为与腾讯的合作上，我们可能有很大的优势。Regarding your second question on the resource allocation by Tencent between the three invested companies, we as a leading platform in the game live streaming space, have continuously cultivate each link of the industry's value chain, and assisted our strategic partner and shareholder, Tencent, in the distribution and promotion of its games.
We also work to attract game users onto our platform. For Tencent, the primary goal of working with a live streaming platform is to promote new games and extend the life cycle of old games. According to third party QuestMobile's data, DouYu has clearly established a leading advantage in terms of user traffic.
We believe that our platform is more competitive than others in terms of cooperating with Tencent.
斗鱼平台聚集了大量的高质量且高粘度的这种硬核的游戏玩家，我们希望能和腾讯紧密合作，来实现更多的这种双赢的局面。至于是否可能合并，我们认为这个主要取决于我们的大股东腾讯的意愿。Lastly, we believe that by leveraging our large
Large group of users, especially those high quality hardcore players that are highly attracted and attached to our platform. We can collaborate with Tencent very closely for a win-win partnership. Ultimately, whether we will see a consolidation to take place is up to Tencent intention. OK, over to you, please.
Thank you. The next question comes from Alex Poon of Morgan Stanley. Please go ahead.
管理层你好，谢谢接受我的提问。我第一个问题想问一下，自这个8月下旬这个抽奖的互动玩法，这个幸运宝藏，比如说下线这个原因是什么？然后这个怎么对你的三季度收入有一个多大的影响？现在这个功能已经恢复了，所以这个现在的日流水情况是不是已经回到之前，或者超过以前的水平？未来这个有没有一个监管的风险？因为竞争对手都用一个不同的做法，这个想多了解一下。I'll translate my question. My first question is, since late August, you have removed certain lucky draw features. Can you let us know the reason why you took it off?
The revenue impact in Q3. Since you have restated these features, how is the revenue run rate at present? Is it better than before you removed these features already? From here onwards, how is the regulatory landscape look like for these features? Thank you.
是这样提出的。关于8月份互动玩法下线的原因，是因为斗鱼一直将企业的长期健康稳定放在首位，为了迎接这个建国70周年，创造良好的网络环境，并且基于管理层的谨慎态度。所以8月中旬，公司将部分的互动玩法积极地做出了自查和调整，对于某些功能玩法做出了部分的调整。
Regarding the reason of the temporary removal of our quiz features in August, we have always prioritized the long-term and sustainable growth of DouYu. In order to contribute to a positive internet environment, our management team made the decision to carry out an assessment of certain interactive features in mid August 2019, prior to China's anniversary celebration. As a result of our internal assessment, we adjusted certain functions of the interactive product feature.
对互动玩法的设计理念是为了增加主播和用户之间的互动，下线之后部分用户的互动积极性受到了一定影响。在我们之后做的这个，我们现在在Q4做了重新的修改，上线之后，目前我们看到的用户的打赏积极性也逐渐在恢复。然后我们现在已经把这个上线之后带来的价值，我们也已经考虑到第四季度的指引当中。
Regarding the revenue impact, our interactive features, including quiz, were designed to enhance the interaction between the streamers and users. Consequently, the removal of certain feature has somehow affected users engagement activity with streamers for a certain period of time in third quarter. After revision and improvement, we initially re-activated part of the features in late third quarter and reactivated the rest in fourth quarter. After resuming the access to our interactive features, the users engagement for these interactive features are gradually recovering, and we have also factored in all of these into our fourth quarter guidance for 2019.
对于未来调整的风险，我们会密切地关注监管机构推出的新的各种相关的法律法规，然后我们会与政府监管部门保持一个积极的沟通。
Regarding the future risk adjustment, we will pay close attention to the relevant laws and regulations issued by the local authorities while maintaining active communications with government departments. Thank you.
The next question comes from Daniel Chen of JP Morgan. Please go ahead.
晚上好，管理层，谢谢接受我的问题。我的问题是关于那个MAU这块。我们现在看到这个三季度MAU的同比和环比增速其实比起二季度都是有所下降的。那我们怎么去看这个四季度，然后还有2020年的整个游戏直播行业的这个用户增速呢？我们会不会觉得这个增速会继续放缓呢？然后我们未来的战略重点会不会从这个用户规模的增长而转移到这个利润提升这方面呢？I will translate myself.
My question is related to the MAU. In the third quarter, we actually see that year-over-year growth and the sequential growth of the MAU actually decelerated from the second quarter. How should we look at the whole gaming live streaming industry's MAU growth in the fourth quarter and 2020? Are we seeing the deceleration to continue? Will DouYu's strategic focus change from user expansion to profitability improvement? Thank you.
我们近期关于游戏直播行业的MAU的增速放缓，我们认为很大一个原因是因为近期缺乏类似于像2016年的《王者荣耀》和2017年的《PUBG》这种爆款游戏的出现，来拉动这样的增长情况。所以我们觉得这跟整个直播平台的供给内容关系很大。所以我们认为未来随着游戏版号的审批的进一步放开，以及腾讯等游戏开发商对于新游戏的持续的开发和投入，我们对于四季度以及2020年游戏直播行业用户的增长仍然保持乐观。我们仍然认为这个游戏直播行业的赛道足够大，然后行业的天花板仍然很高，目前的渗透率也还是很低，我们认为未来还是可以保持持续增长的势头。
We believe that the recent slowdown of the MAU growth in the game live streaming industry was mainly due to a lack of massive hit games such as King of Glory in 2016 and PUBG in 2017. It highly depends on content offering, especially new content. With the reopening of the game licensing approvals, as well as the continued investment and development of new games by game developers such as Tencent, we are quite optimistic about user growth for the fourth quarter of 2019 and the full year of 2020. We also believe that the game live streaming industry has a very high growth ceiling and is large enough to accommodate all players. Currently, the industry penetration rate is still low, which implies an abundant amount of future growth opportunities in the market.
另一方面，随着斗鱼的行业领先位置越发稳固，我们看到，比如在第三方平台类似QuestMobile的数据显示，截止到9月底，斗鱼的月活用户始终保持着行业领先，与其他游戏直播平台的差距正在扩大。未来我们仍然还会把用户规模增长作为最主要的战略重点，通过继续加强和腾讯等游戏开发商和发行商的合作，打造更多优势的定制内容，举办更多电竞赛事，同时也致力于内容生态的多元化等举措，来进一步获取用户和提升用户粘性。
On the other hand, as we further enhance our leading position in the industry, we increasingly enjoy the advantage of our industry leadership. According to third-party data from QuestMobile, as of the end of September, we have significantly outperformed other game live streaming platforms in the industry in terms of MAU. In the future, user growth will continue to be our strategic focus. By further strengthening our cooperation with game developers and distributors such as Tencent, we will create high-quality sports content, host large-scale e-sports events, and diversify the content in our ecosystem to gain further user traction and increase our user stickiness. Thank you.
The next question comes from Li Zhang of Bank of America. Please go ahead.
管理层晚上好，谢谢接受我的提问。我第一个问题是关于头部主播的，因为有看到最近我们有一些头部主播，像张大仙、冯提莫在合约到期之后都离开了。所以想知道一下管理层怎么看我们头部主播比较集中的这个风险？还是说其实可能没有大家想象的这么集中。下一个就是未来一年内有没有哪些可能会到期的主播可以跟我们share一下。我第二个问题是关于内容成本的，可不可以帮我们breakdown一下，就是您刚才在call里mention的几个主要的item，还有就是尤其是主播签约费这一块，最近有看到有什么大的变化吗？还有未来我们应该怎么看主播签约费这一边的趋势。然后我自己翻译一下吧。Thanks management for taking my question.
My first question is about the top host. We notice that some of the top hosts move to other platform after the contract expired. Wondering, how should we look at the concentration risk of the top host? Any key host whose contract might expire in the coming quarters that you can share with us? Secondly, on the content cost, any color on the breakdown, and especially the sign-on bonus related to the top streamer, any change of the sign-on bonus part in the fourth quarter, and how should we look at the trend in the coming years? Thank you.
第一个问题是关于头部主播
我们的头部主播在合同到期后，在续约时通常有时候会要求平台支付一些高额的续约费，这也是历史上行业内主播的恶性挖角这样一个长期行为所导致的。通常的话，我们对主播续约的一个投入和产出的结果，我们会进行一个综合的评估考量。我们会认为部分主播的续约成本过高，而他们能够为平台带来的收入和流量贡献却低于平台的标准。在这种情况下，我们通常会主动地放弃一些主播而停止与他续约。这就是最近一些头部主播合同到期后没有续约的原因。
Some individual top streamers ask for a significantly high amount of signing bonus as one of the conditions for their contract renewal, which we believe was a legacy of poaching streamers of our other platforms through high signing bonus. After we comprehensively evaluate the respective ROIs for these streamers, including their revenue, viewership contribution, as well as the related cost, including their signing bonus, we decided not to renew contract with some of these streamers, given that they are not meeting our internal RI targets. While for others, we are still in negotiation stage.
我们看了些历史数据，那些未续约的主播在合同到期离开平台之后，对我们平台的收入和流量的影响极小。另外的话，我们目前和绝大部分的头部主播的合同期都在三到五年这样一个长期的水平。我们再列举一个数据，就是在我们平台的前100名的签约主播里面，仅有少数几名在未来一年内肯定要到期，目前我们还在和他们进行谈判中。
The historical data shows that terminating contract with these streamers actually has very minimal impact on our revenue and user traffic. In addition, we are having a 3-5-year contract with most of our top streamers, so only very few top streamers out of the top 100 will have their contract to expire within one year, while they are still not renewing yet with us.
第二个问题是关于内容成本。内容成本的话，我们主要是分为这几块。第一个是主播签约金。受到从年初开始的行业内主播恶意被挖角跳槽的行为逐渐规范的这个影响，我们可以看到这个季度的主播签约费继续环比上个季度在下降，而且下降的幅度是符合管理层在年初对这个行业变化的预期。那未来的话，我们仍然有理由相信，主播签约费会再逐步地降低，直到合理的一个水平。第二块内容成本是关于版权费用和其他。随着新游戏的发行，还有一些老游戏的持续推广，电竞赛事的密集度会增加。而且目前的话，国内的版权都是分播版权，没有开放竞争，所以我们预计未来的版权费用和一些支持的赛事费用会有一定幅度的一个上升。
Regarding the breakdown of content cost, to start with, the streamer signing bonus was affected by the industry-wide adoption of the streamers behavior guidelines by Tencent since the beginning of this year, and continued to decline on a sequential basis within the range, which was in line with management's long-term expectations. We expect this trend to continue going forward. Regarding the content rights and broadcasting rights, with the release of the new games and the continued promotion of old games, we expect the frequency of the esports tournaments to increase in the future. Furthermore, the competition for acquiring these broadcasting rights has yet to pick up. As a result, we believe that broadcasting rights and other content-related costs, including the self-organized tournament fees, are expected to rise in the future. Thank you.
The next question comes from Alex Liu of China Renaissance. Please go ahead.
谢谢管理层给我这个机会提问。我有一个问题是关于我们这个带宽成本的。我们看到我们这个季度的带宽成本环比是有下降的，这个原因能不能讲一讲？另外一个就是说，我们看绝对值的话，我们和竞争对手虎牙的带宽成本是有一定差距的，我不知道这个差距我们能不能理解成是不是代表着流量上的差距？那这个我们应该怎么解读？I'll translate myself.
How should we think about the sequential decline of bandwidth cost in the third quarter, considering the high seasonality in third quarter and the fact that our competitor is actually having a higher bandwidth cost? Should we consider or regard the bandwidth cost gap between DouYu and HUYA as any kind of representation of the traffic difference between these two platforms? Thank you.
关于带宽的成本的话，实际上我们可以先看一个数据，我们从内部统计到，从整个19年前10个月来看的话，10月份的带宽的峰值实际上相比较1月份增加了70%。但是因为我们技术上的一些使用，以及精细化的带宽管理，同期的云服务商的带宽的计费的用量只增加了18%，所以这是一个巨大的差异。另外一点是关于带宽成本金额的一个环比下降，主要原因我们可以理解为几点。第一个是我们的商务的议价能力在增强，带宽云服务商在今年第二季度和第三季度分别有一次幅度比较大的降价。第二个，我们会通过一些主动管理、限速、封止，还有对一些冷门长尾用量进行拉流的限制，提高了带宽的使用效率。第三点是我们的自建CDN和P2P使用比例在逐步的提高，这个也会降低我们的带宽成本。至于说我们和竞争对手之间的带宽成本比较，当然了，我们是不知道对手的这个项目的分类，以及它包含的一些内容。那我们想起来会有几点原因，第一个是更先进和更成熟的分发传输的技术，对于自建的CDN和P2P的使用比例可能会更高，分发效果也比较好。第二个，更加精细化的带宽资源的调度能力和使用，减少了一些冗余的开销。第三个，基于全站的带宽的预测能力，主动调整用量分配，充分地利用这几家云服务商的计费规则，实现计费的最优化。
Regarding the sequential decreases of bandwidth cost in the third quarter, let me give you some data points for reference. The bandwidth usage at peak period in October this year increased by 17% as compared to January. However, due to our deployment of proprietary P2P and CDN technologies, as well as active bandwidth usage management, the chargeable bandwidth usage during the same period only increased by 18%. Regarding the reason why we are having a sequential decrease in bandwidth cost, is mainly due to 3 reasons. Number 1, we are increasing our bargaining power in negotiation with the bandwidth service providers, which leads to unit price decreases. During the second quarter and third quarter this year, we saw unit price decrease twice.
Secondly, the improved bandwidth usage efficiency as we actively manage our bandwidth usage during peak periods such as tournament, as well as consolidate some bandwidth consumption from unpopular long tail queries. Lastly, we reduced IT outsourcing expenses by developing the proprietary CDN and P2P technologies. Lastly, the reason why we have lower bandwidth cost than our competitors, although we don't really understand what our competitor is doing, for us, we have more sophisticated proprietary technologies on CDN and P2P, and we are also deploying these technologies on a very large scale. Certainly, we are very accurate and efficient in terms of managing the bandwidth usage efficiency, which ultimately results in a significant cost saving.
Lastly, based on our precise bandwidth usage forecast, we actively manage bandwidth usage throughout the platform and make full use of the resources by the multiple suppliers that are working with us in order to minimize the average bandwidth unit cost. Thank you.
The final question today or this evening will come from Thomas Chong of Jefferies. Please go ahead.
谢谢管理层来接受我的提问。我主要想问一下，未来我们跟主播的分成的比例会是保持平稳还是会有上升的空间呢？第二个问题，就是关于我们游戏跟非游戏的战略。可以谈一下从收入跟内容成本方面，游戏跟非游戏这两个领域往后的发展。然后最后一个问题想问一下，可以分享一下我们在海外的战略，除了广告以外，我们有没有什么strategy去做游戏分发呢？Thanks management for taking my questions.
My questions is about, first, the revenue sharing ratio with the broadcasters. Is there any trend that we are seeing that may increase in the future? My second question is about the content strategies, in particular about the game and the long game content cost as well as the revenue growth in the future. My final question is about the competition in overseas markets, as well as our thoughts on game distribution other than advertising. Thank you.
关于第二个问题是关于分成比例的。在过去的两年中，我们和主播的分成比例还是比较稳定，基于一个大的原则是双方收入进行一个五五分成。那在可预见的未来，我们也没有预见到分成比例会发生明显的变动。第二个问题是关于游戏和非游戏领域的内容成本的投入。实际上，基本上绝大部分的内容成本都是投入在游戏领域，主要的头部主播也产生在游戏分区。我们购买了电竞的版权，包括一些赛事，也都是围绕在游戏，特别是一些核心的硬核的电竞游戏来开展的。而在非游戏的领域，我们主要是通过和主播进行收入分成的方式来让主播取得收入，并不是说一些内容的投入。
Okay. I'll try to answer for the first question first. Regarding the revenue sharing ratio between the platform and streamers, we have been fairly stable to keep it at a 50/50 split in the past few quarters, and we don't foresee a significant change going forward. Regarding the second question on our investment on content, we believe that most of our content investment are focused on game category, where we include both broadcasting rights with procurement and also esport team sponsorship. For non-gaming sectors, including talent show and other segments, we are mainly sharing the revenue with our streamers rather than compensate in other ways.
关于内容成本的未来的增长，刚才提到了我们的内容成本里面的主播签约金这一块，我们是致力于持续降低它的水平，一直到比较合适为止。版权在未来是可能会有一定的上升的幅度。
Regarding the future growth expectation for content cost, we believe that the signing bonus for the streamers will be on a sequential decline trend for the next few years until we reach a reasonable level, while for content rights, then broadcasting rights, we believe that we will expect a certain level of increase in the future.
我来回答一下关于斗鱼在海外以及斗鱼的创新和游戏分发这两个问题。斗鱼在海外已经有相应的布局，包括在印尼、越南、印度、台湾地区，还有拉美等国家或者是地区都有一些尝试。我们在今年九月底的时候，在日本市场的探索，我们也上线了一个独立的产品叫Mildom。目前我们在海外化某些国家或者地区也取得了一些不错的表现。但是我们整体对于海外化来说，还是持一个比较谨慎的态度。正如我们之前跟大家所沟通的，某些国家或者地区，它的用户习惯还没养成，还有一些国家或者地区的用户付费习惯也是需要持续性地培养。所以我们是以一个很谨慎的态度来拓展海外市场。未来我们有更多的、更深度的数据之后，会跟大家做相应的分享。
Regarding your last question on overseas investment, we believe that the current user growth of normalized our overseas platform in areas like Indonesia, Vietnam, India, Taiwan, and Latin America and other regions are on track. However, the game live-streaming market in these countries are still at a very early stage of development. Users in these locations have not yet formed a mature paying habit. We are still currently focusing on user base growth and exploring some monetization opportunities. In the third quarter, we also invested in the Japanese market and utilized our Japanese partners local resources and our product for the Japanese market called Mildom, has already launched in the third quarter this year.
关于创新这个问题，从斗鱼成立开始到现在，我们一直在创新方面进行持续性的投入，包括我们最早去引入弹幕在游戏直播领域，包括我们去探索小额付费的模式，都是我们在过去在创新方面所取得的一些成绩。在未来我们仍然继续去做新的尝试，以探索将游戏与直播更深度地来去结合。比如说我们已经在积极地探索与云游戏厂商的一些合作，对未来的布局提前做一些准备。同时，我们也在探索一些新品类的广告。截至目前，我们所做的这些尝试还是处于一些初期的阶段，等到有明确的产品上线和数据后，会跟大家做相应的分享。关于游戏分发这一块业务，基于我们对于市场的判断，我们目前没有考虑去做游戏发行的业务。
We have been experiment that combined gaming and live streaming, for example, in past, we invented the bullet chat, and also we have some trials in the mini games, apps, etc. We are also proactively laying the groundwork for cloud gaming, and we are also working on new categories of advertising. For some of these attempts, we are still in the early stage, and we will update investors on our progress in the product and the matrix at the appropriate time. At current stage, we are not considering distributing anything.
Did that conclude your response to the question?
Yes, please.
This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.
Thank you for joining our call today. We look forward to speaking with everyone next quarter. If you have any questions, please contact the IR team of DouYu. Thank you.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.