Hello, ladies and gentlemen. Thank you for standing by for the fourth quarter and full year 2020 earnings conference call for HUYA Inc. At this time, all participants are in a listen-only mode. Today's conference call is being recorded. Now, I'd like to turn the call over to Ms. Dana Cheng, Company Investor Relations. Please go ahead.
Hello, everyone, and welcome to HUYA's 2020 first quarter and full year earnings conference call. The company's financial and operational results were issued earlier today, and I'll post it online. You can also view the earnings press release by visiting the IR website at ir.huya.com. A replay of the call will be available on the IR website in a few hours. Participants on today's call will be Mr. Rongjie Dong, Chief Executive Officer of HUYA, and Ms. Catherine Liu, Chief Financial Officer.
Management will begin with prepared remarks, and the call will conclude with a Q&A session. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be inherent or different from the views expressed today.
Further information regarding these and other risks and uncertainties is included in the company's prospectus and other public filings filed with the U.S. SEC. The company does not assume any obligation to update any forward-looking statements except as required under applicable laws. Please also note that HUYA's earnings press release and this conference call include discussions of non-GAAP financial information, as well as non-GAAP financial measures.
HUYA's press release contains the reconciliation of the non-GAAP measures to the most directly comparable GAAP measures. I will now turn the call over to our CFO, Ms. Catherine Liu, who will read prepared remarks on behalf of our CEO, Mr. Rongjie Dong. Catherine, please go ahead.
Thank you, everyone, for participating in our conference call today. I am pleased to deliver today's opening remarks on behalf of Mr. Dong. We are very pleased to report another quarter of solid performance across our businesses, allowing us to finish 2020 on a strong note.
Total net revenues for the fourth quarter of 2020 increased by 21% year- over- year to close to 3 billion RMB, while full year revenues crossed the 10 billion RMB mark for the first time. We believe our enhanced monetization capability sets a solid foundation for us to reinvest into the business and strengthen our future. Robust user growth and higher user engagement also continue to underline our ability to execute well.
Mobile MAUs of Huya Live reached 79.5 million in the fourth quarter, a year-over-year growth of 29%, and a net addition of 5 million compared to Q3, further reinforcing our leadership position on the mobile end. Strong mobile growth was driven by the continued build-up of our quality content library, especially with esports tournaments and entertainment programs, product improvements, as well as marketing activities.
Meanwhile, our Huya Live app's month-to-month retention rate remained at over 70% in the fourth quarter. Driven by mobile growth, average MAUs of Huya Live in the fourth quarter increased by 19% year over year to 178.5 million. Paying users for Huya Live increased by 18% year over year to 6 million in the fourth quarter. Notably, around 80% of our paying users paid with mobile devices, and mobile users contributed to more than 85% of our live streaming revenue this quarter.
This result further endorsed our mobile strategy focus as we continue to allocate resources to grow our mobile user base. The growth in both financial and operating metrics validates the strong appeal of our content. Achieving such sound results in the midst of a global pandemic proves the resilience of our business and represents an important milestone for our company as we move forward. We have also committed to creating more immersive experiences for our users.
In the fourth quarter, our open platform for third-party application developers continued to gain popularity. By the end of the fourth quarter, there have been around 200 tools available across the platform, and over 400,000 broadcasters have used these tools during their streaming sessions. Most of the tools are game-centric, offering smart assistance to broadcasters to better engage users.
Since we officially launched our cloud streaming platform, Yowa, in November last year, we have been able to reduce latency to deliver an industry-leading level of user-friendly experience. Thanks to our continuous technology advancements, our average stable time spent per user of Yowa has now reached around 90 minutes, indicating higher engagement. We have also started efforts in the integration of the cloud streaming function into our core HUYA Live streaming for broadcasters to better interact with users.
Now, moving on to our collaboration with Tencent. In the fourth quarter, average MAUs who watched HUYA Live streaming content from Tencent's platform, which are not counted in our reported MAUs, was around 20 million, with WeChat, Game Center, and LOL remaining as the most popular channels. On the broadcaster front, HUYA has collaborated with Tencent to help our broadcasters receive greater exposure within Tencent's game communities, further increasing their influence.
For example, the Honor of Kings, TiMi Studio Group recently cooperated with a celebrity broadcaster on HUYA's platform to release the broadcaster's voice packet within the game. After the release, the broadcaster gained over five million fans in the in-game community, affecting a greater audience and expanding the potential streaming viewer base. Next, I will provide you some updates on the ongoing merger with Douyu.
After we announced our potential merger with Douyu in October last year, we have made relevant filings with SEC, and in China, we have voluntarily submitted the declaration of concentration of undertakings with the State Administration for Market Regulation, the relevant regulatory authority. Currently, the review is still in the process. As we embrace 2021, we will continue to extend the breadth and diversity of our platform and invest in content ecosystem, product upgrades, and technologies to better serve our growing user base. This concludes Mr. Dong's remarks.
Let's start with updates on content enrichment and diversification. In Q4, we broadcasted 149 third-party esports tournaments, among which the top tournaments included LOL World 2020, i.e., S10, and the Demacia Cup, four seasons of KPL and PCL, and exclusively broadcasted National Electronic Sports Tournament, i.e., NEST. Total viewership for these tournaments reached around 665 million in the fourth quarter, representing a 24% year-over-year growth.
As far as our self-produced content, we organized 48 esports tournaments and entertainment shows and generated a total viewership of 109 million, representing 53% year-over-year growth. The top-performing self-produced esports content in the fourth quarter includes our long-standing PUBG event, HUYA TMC Season 8, and our commentary program for LOL World, Huya Shuo S10.
In TMC S8, there are eight international teams also joining the competition for the first time, and the success of this global participation is a further testament to our ability to organize high-quality esports events. Among the entertainment PGC shows this quarter, Wake Up Losers and Auto Chess Simulated Reality Show, The Voice of Huya, an outdoor talent show, and Huya Kung Fu Carnival Season 3, a mixed martial arts competition, have gained popularity, and we believe such shows will continue to improve user stickiness on Huya's platform.
Turning to our overseas business, the MAUs of overseas business was around 30 million in the fourth quarter, representing a 50% year-over-year increase. We also achieved leading market positions in certain countries and had some successful monetization attempts through our localized operational efforts. Next, I will walk you through our financial highlights.
In the fourth quarter, our total net revenues grew by 21% year-over-year to close to RMB 3 billion. Our live streaming revenues increased by 20% year-over-year to RMB 2.8 billion in the fourth quarter. The growth was primarily due to the increased number of paying users and the increase in revenue per paying user, both of which have expanded year-over-year. Advertising and other revenues increased by 45% year-over-year to RMB 175 million in the fourth quarter of 2020, primarily driven by the increasing and diversifying number of advertisers.
Our profitability continued to improve this quarter, given the leverage we have in bandwidth costs and our operational efficiency. Our non-GAAP gross margin improved to 20.6% compared with 19.5% in the fourth quarter last year. Our non-GAAP operating margin was 9% compared with 7.4% in Q4 2019, and our non-GAAP net margin was 10.2% compared with 9.8% in Q4 2019.
Now, let me move on to our financial details. If not specified, all the growth rates are on year-over-year terms. Cost of revenues increased by 19.6% to RMB 2.4 billion for the fourth quarter, primarily attributable to the increase in revenue sharing fees and content costs. Revenue sharing fees and content costs increased by 29.8% to RMB 2 billion for the fourth quarter, primarily due to the increase in revenue sharing fees in relation to higher live streaming revenues and an increase in spending in esports and self-produced content, as well as on content creators.
Bandwidth costs decreased by 26.1% to RMB 167 million for the fourth quarter, primarily due to improved management in bandwidth costs and continued technology enhancement efforts. Gross profit increased by 28.1% to RMB 598 million in the fourth quarter, and gross margin increased to 20% for the fourth quarter.
Research and development expenses increased by 21% to CNY 216 million for the fourth quarter, mainly attributable to increased personnel-related expenses. Sales and marketing expenses increased by 63.2% to CNY 193 million for the fourth quarter, primarily attributable to the increased marketing expenses to promote the company's content, products, services, and brand name, as well as increased personnel-related expenses.
General and administrative expenses decreased by 0.3% to CNY 96 million for the fourth quarter, mainly due to improved management efficiency. Operating income increased by 84.4% to CNY 187 million for the fourth quarter, and operating margin increased to 6.3% for the fourth quarter. Non-GAAP operating income, which excludes share-based compensation expenses, increased by 46.5% to CNY 269 million for the fourth quarter, and Non-GAAP operating margin increased to 9% for the fourth quarter. Net income attributable to HUYA Inc.
For the fourth quarter increased by 58.6% to RMB 253 million, and non-GAAP net income attributable to HUYA Inc. for Q4, which excludes share-based compensation expenses, gain on fair value change of investments, and equity investments, partial disposal of its investments, net of income taxes, increased by 26.5% to RMB 306 million. Diluted net income per ADS was RMB 1.05 for Q4, and non-GAAP diluted net income per ADS was RMB 1.27 for Q4.
As of December 31st, 2020, the company had cash and cash equivalent short-term deposits and short-term investments of RMB 10.5 billion compared with RMB 10.8 billion as of September 30, 2020. The decrease was primarily attributable to the land use rights acquisition of approximately RMB 310 million in Foshan City in November 2020. The net cash provided by operating activities was RMB 459 million for the fourth quarter.
Moving on to our full year 2020 results, total net revenues in 2020 increased by 30.3% to RMB 10.9 billion. Live streaming revenues increased by 29.3% to RMB 10.3 billion in 2020, primarily due to the increase in the number of paying users and an average spending per paying user on HUYA Live. The increase in the number of paying users was primarily driven by the company's overall user growth.
The increase in the average spending per paying user was primarily driven by the enrichment and enhancement of content, products, and services. Advertising and other revenues increased by 51.3% to RMB 603 million in 2020, primarily driven by the increasing and diversifying advertiser space, mainly attributable to strengthened recognition of HUYA's brand name in China's online advertising market.
Cost of revenues increased by 25.4% to RMB 8.6 billion in 2020, primarily attributable to the increase in revenue sharing fees and content costs, bandwidth costs, and personnel-related costs. Revenue sharing fees and content costs increased by 27.6% to RMB 7.1 billion in 2020, primarily due to the increase in revenue sharing fees in relation to higher live streaming revenues, and then the increase in spending in esports and self-produced content, as well as on content creators.
Bandwidth costs increased by 9.8% to RMB 879 million in 2020, primarily due to an increase in bandwidth usage as a result of the company's larger user base, partially offset by improved management in bandwidth costs and continuous technology enhancement efforts. Gross profit increased by 53% to RMB 2.3 billion in 2020, and gross margin increased to 20.8% in 2020.
Research and development expenses increased by 44.3% to RMB 734 million in 2020, mainly attributable to increases in personnel-related expenses. Sales and marketing expenses increased by 27.3% to RMB 558 million in 2020, primarily attributable to the increased marketing expenses to promote the company's content, products, services, and brand name, as well as increased personnel-related expenses. General and administrative expenses increased by 26.1% to RMB 445 million in 2020, mainly due to the increase in personnel-related expenses.
Operating income increased by 177.4% to RMB 725 million in 2020, and operating margin increased to 6.6% in 2020. Non-GAAP operating income, which excludes share-based compensation expenses, increased by 108.6% to RMB 1.1 billion in 2020, and Non-GAAP operating margin increased to 10.4% in 2020. Net income attributable to HUYA Inc. increased by 88.9% to RMB 884 million in 2020, and Non-GAAP net income attributable to HUYA Inc.
In 2020, which excludes share-based compensation expenses, gain or fair value change of investments, and equity investments, partial disposal of its investments, net of income taxes, increased by 68.2% to RMB 1.3 billion. Diluted net income per ADS was RMB 3.71 in 2020, and non-GAAP diluted net income per ADS was RMB 5.29 in 2020. Net cash provided by operating activities was RMB 1.2 billion for the full year of 2020. With that, I would now like to open the call to the questions.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask your question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press pound or hash key. For the benefit of all participants in today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. So once again, ladies and gentlemen, if you wish to ask a question, please press star 1 now. Your first question comes from Thomas Chong from Jefferies. Please ask your question.
[Foreign language] Thanks, Management, for taking my question. My question is about a 2021 outlook. Can Management comment about how we should think about the revenue and the user growth trend for this year? On the other hand, can Management also comment about our strategies for the gaming and the non-game segments? Thank you.
[Foreign language]
Hi, I will translate for Mr. Dong. Regarding our first question, Mr. Dong has answered the strategic part of them. So for the year 2021, on the business side, we actually have several strategic focuses. Firstly, on the live streaming business, we will try to see the opportunity that's provided by the new potential drawbacks to the games that is the potential to launch later this year, just so that we can strengthen our competitive advantage.
Meanwhile, we will strategically focus on the esports tournaments licensing rights and the self-produced esports tournaments, just so that viewers can enjoy a better esports tournament content on our platform, and meanwhile, we will also set an effort on the self-produced PGC shows to provide users with a diverse and enriched content library. In addition to the live streaming business, next I will talk about our ambitions for the video business. As we have previously communicated, video business is actually a one-shot business that potentially requires a relatively longer time for us to get the users and to monetize.
Actually, through the endeavor that we have put out in the past few quarters, we actually have already seen some promising results on the video business, as the viewership of the video business is actually on a yearly growth of 40% right now. The routine part for the video business is to do the on-demand viewing experience provided for those users.
Going forward, we would like to maintain our advantage for the on-demand business. Meanwhile, try to integrate better the live streaming business together with the video business. We actually have already tried some of them, and it's actually making good effect. Next, I will talk about the other business sectors that we will put strategic focus on, which is game communities.
On the game community side, we plan to integrate the game-related information and the game-related know-how knowledge to integrate all that kind of services on our platform, just so that viewers and users can have a one-stop shopping experience. On the non-gaming side, things are actually similar to what we used to do in the past.
We will continue our strategic focus on the content genres such as outdoor, traditional sports, and ACG, and try to strengthen the quality content on those genres and acquire new users from the market. And having said enough about the domestic market, next I will share some color on the overseas market. For the Nimo TV this year, what we will focus on is not only to strengthen our leading position in the existing countries, but also try to construct a comprehensive acquisition.
Meanwhile, we will actually focus on the break-even point for each of the countries that we operate in and try to downsize the business in those countries which are loss-making. So with that being said, we will just strengthen our leading position in Southeastern Asian countries and some Middle Eastern countries. So these are our users I'll look for Nimo TV. And Catherine will take the other question, of course.
Thank you, Thomas. I think with Mr. Dong's remarks on our growth strategies in 2021, we believe the users and the revenues will continue to increase this year. In terms of game versus non-game strategies, obviously our focus is still on game content, as Mr. Dong just mentioned. But of course, non-game content is also an important part for our monetization.
So we will continue to invest in game content to help us to grow more users, and we will also invest in the non-game content for us to improve monetization. But of course, for some of the non-game content categories, if we see them grow to a certain large scale, we will also try to invest more in those content categories and potentially cultivate for new users in the future from those content categories. Hope this answers your questions. And next.
Thank you. Next question, Lei Zhang from Bank of America Merrill Lynch. Please go ahead.
Hi, Rongjie Dong, Catherine Liu. [Foreign language] Thank you, Management, for taking my question. Two questions here. First is, can you give us some outlook on the competitive landscape in 2021, especially in game streaming space? Secondly, since you mentioned your investment in esports and video related content, so can you give us more color on your content investment plan in 2021? Thanks.
[Foreign language]
All right. As a translation, regarding our competitive landscape question, especially with those new entrants, those video platforms, we would like to say that for those video platforms like Bilibili and Kuaishou, what we have been doing for the live streaming business is to convert your existing VTubers and video users to the live streaming broadcasters and live streaming users, respectively.
But the vast benefits brought by the conversion period have already come to an end, I would say. Going forward for them, I would say we will have to enter into the period, try to cultivate a better and quality pool of the broadcasters, and construct your own ecosystem for the live streaming business.
We believe Huya is at an industry-leading position compared with those video platforms, especially on the quality content and the quality broadcasters, especially our monetization capabilities. Those areas we are superior to all those video platforms, I would say. So basically, we think the competitive landscape for the live streaming business hasn't really changed much. And Catherine, we will take your other question.
Thank you, Lei. In terms of the content investment, this year we will still focus on game content, such as obviously one important factor is the esports tournaments. We are pretty much going to have comprehensive and pretty much most of the important esports tournaments. And we will also increase the self-made content to help grow our users further. In terms of video, this year we do plan to add additional investments into game video for future user growth.
We believe that if we could have a successful video business, this will not only pave the way for future user growth, but it can also be a monetization opportunity in the future. Hope this answers your question. Next.
Thank you. Our next question comes from Alex Liu from China Renaissance. Please go ahead.
[Foreign language] Thanks, Management. In the prepared remarks, the management introduced that there is a sizable group of users that come from Tencent property right now, and this is not really in our reporting MAU. Could the management share some color on how to further grow this group of users, and how should we think about the monetization roadmap and the monetization potential for this group of users? Thank you.
[Foreign language]
All right. As a translation, I will provide you some updates about the ongoing collaboration that we have with Tencent. By the year end of 2020, we have actually connected live streaming content across almost 20 games of Tencent and also several Tencent products. That includes League of Legends, Honor of Kings, Crossfire, and products include WeGame, WeChat Game Live Streaming Mini Program, Mobile QQ Gaming Center.
Earlier this year, during the Spring Festival, we actually collaborated with Weishi, the short video platform of Tencent, and we have collaborated with them during the Spring Festival. Currently, the traffic brought by those external Tencent links is not counted in the quarterly reported MAUs of ours. In the first quarter, the external Tencent links contributed to around 20 million MAUs, which is relatively lower compared with Q3, as Q3 is the school summer holidays.
And in terms of the collaboration on the gaming side with Tencent, we actually have just signed a five-year licensing agreement with TJ Sports in terms of the broadcasting rights of League of Legends Pro League, LPL for short. Specifically, we stated in the agreement we actually have discussed with TJ Sports in terms of exploring more opportunities to better monetize esports tournaments.
As in the old days, esports tournaments is actually serving as a major traffic engine that brought a lot of users, but it contributed little to monetization, which is why we're trying to work with TJ Sports' esports tournament arm of Tencent to seek more opportunities on the esports monetization side.
And in terms of better engaged users, we are trying to work with Tencent to integrate, to breach through users' Tencent Game ID with their Huya account to provide better cross-functional or cross-platform experience for them, just so that we can provide personalized recommendations on precise targeting at those users so that their user experience can be improved. That's it.
Thank you. Our next question comes from Tian Hou from T.H. Capital. Please ask your question.
[Foreign language] Okay, so [Foreign language]. Okay, so two questions. One is, I feel like somehow whatever brought us the major users and the user growth were the games from Tencent. And is that possible for us to bring in the games from other vendors domestically and internationally to further grow our user base and paying user base?
That's number one. Number two, as over the last many years, Huya grew pretty rapidly, felt like already past its peak. And however, the game broadcasting industry relatively still young. In which area Huya is going to invest for the further higher growth in 2021? [Foreign language].
[Foreign language]
All right. As a translation, in terms of your first question regarding whether there is a future for us to broadcast specifically on Tencent games, there actually is not, because currently Tencent games are the best-performing games in the market, especially in the domestic region. So it is more of a result of the current industry situation rather than the purpose of our activities in the market. And speaking of the investments for this year, I will start with the overseas market. As we always do, we hope the overseas market one day can achieve a break-even point.
And we think it's quite promising because the revenue growth of the overseas market is actually on a surge right now. And for the domestic market, like I said earlier, we would like to strengthen or build up our content general, specifically on the video business. You can consider it as a defensive or more of an aggressive move for us to try to make the video business prosperous.
And we aim to grab some certain market share for the video business in the industry. And in addition to the video business, whether it's cloud gaming or other initiatives, we actually had a wide span in terms of the effort moving. So yeah, things are quite promising this year.
All right. Thank you. Your next question comes from Vincent Yu from Needham & Company. Please ask your question.
[Foreign language] Thank you, Management, for taking my question. My first question is about the 2021 game releases by Tencent. There are several flagship mobile games that will be scheduled to release by Tencent in 2021. Which game launches in 2021 does the company think will have the biggest impact on Huya? And the second question is on the regulatory guideline. Can Management share some comments on the potential impact on our business with regards to the regulatory guideline issued back in November 2020? Thank you.
[Foreign language].
All right. For your first question regarding the new games, actually there are several games that we considered as a potential broadcasting games for the year. The first one is DNF Mobile. The second one is League of Legends Mobile. And probably there is a chance for them to be potentially launched in Q3 this year, so it's probably a little bit late.
But consider us as an industry-leading platform, especially quite excelled at promoting new games. We are the record-keeping one platform to promote and operate new games and attract viewers to the platform and also to the games. So we have confidence that the launch of those new games, with the launch of those new games, we can continue our industry-leading position.
And even though it's being launched a little late, but we actually started the preparation period as early as last year in terms of recruiting new broadcasters and constructing the designated game-related ecosystems. So we really look forward to the launching of those new games this year. That's for your first question.
Thank you, Vincent. And before your question for the government regulatory changes, as you have been probably reviewing, since I think the beginning of 2020, there have been a lot of the government attentions on the industry. Huya has been closely monitoring and following the regulatory guidelines. Currently, we are still waiting for the details of the potential new guidelines to come out.
We will definitely follow the government's new guidelines and rules when it comes out. For the moment, we believe that the government's guidelines would be better regulate the industry and potentially for the long-term healthy growth of the industry. We believe that even if there might be some short-term changes to follow the rules, the long-term impact should really be minimal. Of course, we will wait for the details of the new guidelines and update the investors at that time. Hope this answers your questions.
All right. Thank you all for your questions. I'd now like to turn the call back to the company for closing remarks.
Thank you all for joining our conference call today. If you have further questions, feel free to contact ir@huya.com. We look forward to speaking with you in the next quarter. Thank you.
This concludes this conference call. You may now disconnect your line. Thank you.