Hello, ladies and gentlemen. Thank you for standing by for the 2020 second quarter earnings conference call for HUYA Incorporated. At this time, all participants are in a listen-only mode. Today's conference call is being recorded. I will now turn the call over to Ms. Dana Cheng, Company Investor Relations. Please go ahead.
Hello everyone, and welcome to HUYA's 2020 second quarter earnings conference call. The company's financial and operational results were issued earlier today and are posted 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 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 materially 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 as 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 unupdated GAAP financial information, as well as unupdated non-GAAP financial measures. HUYA's press release contains the reconciliation of the unupdated non-GAAP measures to the unupdated most directly comparable GAAP measures. I will now turn the call over to our CEO, Mr. Rongjie Dong. Please go ahead.
Hello everyone. Thank you for joining our conference call today. HUYA has achieved outstanding results across our core businesses in the second quarter of 2020. Our total net revenues grew 34% year over year to RMB 2.7 billion, continuously exceeding our previous expectations. Our gross profit grew 71% year over year to RMB 575 million, further demonstrating our fast growth and improved profitability. With respect to the user traffic, despite the fact that people in China have largely resumed their daily work and school schedules, we maintained the momentum that we built during the pandemic period in Q1 on the mobile end. We accomplished year-over-year growth of 35% for the mobile MAUs of Huya Live, reaching 75.6 million in Q2. As China's commerce and people's activities move toward normalcy, many offline internet cafes have also reopened, supporting the rebound of our non-mobile MAUs in Q2.
As a result, the average MAUs of Huya Live increased by 17% year over year to 168.5 million in the second quarter, representing a net addition of over 17 million from Q1. The growth was primarily driven by our dedication to continuously enriching our content offerings while further improving the content quality. Next, I would like to share with you some updates about the preliminary cooperation that we have started with Tencent since Tencent became our controlling shareholder in April. HUYA's live streaming content is now available within an increasing number of Tencent games and products, which will help us tap into an expanded pool of users. Users who watched our live streaming content within Tencent games and products, such as WeGame, WeChat Game Center, and QQ Mobile Game Center, were not counted in Huya Live's MAUs.
In addition to our HUYA Live's MAUs, average MAUs who watched HUYA Live streaming content from these external links within Tencent games and products increased by 16% in Q2 from Q1. We are also in the process of building exclusive one-click streaming services within some of Tencent's games to attract more broadcasters. With the new service Tencent gamers can simultaneously stream their gaming experience through the click of a button and essentially become our broadcasters. In terms of the eSports tournaments, we are also working together with Tencent in various dimensions, such as cooperation in eSports tournament content, traffic exposure for live streaming content, advertising opportunities, as well as innovative products to improve users' viewing experience of the eSports tournaments. Finally, but importantly, we have always been trying to stay nimble to meet the ever-growing demands of users while continuously developing and expanding our product offerings for long-term growth.
Most recently, in June, we launched our cloud gaming platform called Yowa, offering over 40 game titles. The platform made easier access for a broader audience to enjoy the fun of games, and our long-term prospect for Yowa is to enable our users to play together with our broadcasters and enjoy unique, interactive fun experiences. We have also strengthened our efforts for videos, mainly focused on mid-length game videos. In the second quarter, average MAUs who watched videos on our platform increased by 60% year over year to approximately 20 million. Our business is more diversified, and all of these efforts will help us seize future opportunities and emerge in an even stronger position in the game live streaming market. With that, I will now turn the call over to our CFO, Catherine, to share her insights on our operating metrics and financial details. Catherine, please go ahead.
Thank you, Mr. Dong, and hello everyone. Following Mr. Dong's remarks, I will start with updates on content enrichment and diversification. From the broadcaster side, we have kept the momentum we built during the pandemic period in Q1. The number of average monthly active broadcasters remained at over 800,000, representing a 12% year-over-year increase. In the second quarter, we broadcasted 102 third-party eSports tournaments, among which the top performance include LCK Spring season, which we have gained three-year exclusive broadcasting rights, as well as LPL Spring and Summer season, PEL, and KPL. Total viewership for these tournaments reached a historical high of over 770 million in the second quarter, representing a 24% year-over-year growth. Another key part of our continued commitment is our self-produced content. In the second quarter, we organized 34 eSports tournaments and entertainment shows, generating a total viewership of 112 million, representing a 36% year-over-year growth.
During the first half of this year, the scale of new users that were attracted to our platform by this self-generated content was comparable to third-party eSports tournaments we broadcasted. Among the eSports tournaments that we produced, HUYA Destiny Cup Season 6 and then the fifth HUYA Mobile Game Arena were the top ones. The scale of their viewers and then the new users they brought to our platform is comparable to some S-rated third-party official eSports tournaments. On the entertainment show front, we produced a series of original PGC shows on our path to content diversification in this quarter. For instance, we produced Attitude, a reality show discovering the in-depth stories of the game live streaming industry. Real Expert, a music talent show that attracted great enthusiasm and participation among our broadcasters. And High Streaming, a news show focused on eSports broadcasters and professional leagues.
Thanks to our dedicated efforts to drive quality content offerings, in the second quarter, our average mobile MAUs and MAUs reached record high of 75.6 million and 168.5 million, respectively. At the same time, our Huya Live app's next month retention rate still remained over 70% in the second quarter. In line with the continued growth of our users, the paying users for Huya Live also increased by 27% year over year to 6.2 million in the second quarter. The live streaming revenue per paying user for Huya Live also increased year over year as we continue to unlock the monetization potential of our core user assets by effective operations of activities such as HUYA Fans' Party, the online event we organized in June. As we continue to grow globally, we reached over 27 million MAUs for our overseas business in the second quarter.
The growth was partially driven by increased internet usage as people were confined at home during the COVID-19 outbreak, similar to what we have experienced domestically in the first quarter. Now, let me walk you through our financial highlights. In the second quarter, our total net revenues grew by 34% year over year to RMB 2.7 billion. This is the ninth consecutive quarter that we exceeded our expectations since our IPO. One thing I would like to point out here is that our game companion business revenue is booked after deducting the revenue sharing fees for the broadcasters, while our virtual gifting revenue is booked before deducting the revenue sharing fees for broadcasters. We started the game companion business in the second quarter of last year, so the difference in accounting treatment previously had minimal impact to the revenue growth. In recent quarters, it has grown more sizable.
In the second quarter, the gross billings generated from our businesses actually grew faster than our recognized net revenues. Our live streaming revenues increased by 34% year over year to around RMB 2.6 billion in the second 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 and quarter over quarter. Advertising and other revenues increased by 49% year over year to RMB 132 million in the second quarter, primarily driven by the increasing and diversifying number of advertisers. There's a slight decrease in the advertising revenue from Q1, mainly because of the higher user base set by COVID-19 for gaming advertisers in the first quarter.
Our profitability continued to improve in the second quarter as we benefited from the savings in optimizing our broadcaster signing fees while we continue improving our operational efficiencies. Our Non-GAAP gross margin improved to 21.9%, compared with 20.3% in the first quarter and 16.9% in the second quarter last year. Our Non-GAAP operating margin improved to 12.1%, compared with 9.4% in the first quarter and 5.8% in the second quarter 2019. Our Non-GAAP net margin improved to 13%, compared with 10.9% in the first quarter and 8.5% in the second quarter 2019. Now, let me move on to our financial details with year-over-year growth rates. Cost of revenues increased by 27% to RMB 2.1 billion for the second quarter, 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 24% to RMB 1.7 billion for the second quarter, primarily due to the increase in revenue sharing fees in relation to higher live streaming revenues and increased spending in content creators, eSports, and self-produced content. The year-over-year increase was partially offset by benefits from economies of scale. Bandwidth costs increased by 35% to RMB 265 million for the second quarter, primarily due to an increase in bandwidth usage as a result of our larger user base and enhanced live streaming video quality. This was partially offset by improved efficiency in bandwidth utilization through continued technology enhancement efforts. Gross profit increased by 71% to RMB 575 million for the second quarter, and gross margin increased to 21.3% for the second quarter. Research and development expenses increased by 71% to RMB 180 million for the second quarter, mainly attributable to increased personnel-related expenses.
Sales and marketing expenses decreased by 4% to RMB 150 million for the second quarter. The decrease was primarily attributable to lower spending in marketing activities due to the impact of COVID-19 and partially offset by the increased personnel-related expenses. General and administrative expenses increased by 61% to RMB 120 million for the second quarter, mainly due to the accelerated share-based compensation expenses recognized in April 2020 in the event of a change of control. In terms of the total share-based compensation expenses, we also have a recent update to share with you. In April 2020, we recognized RMB 57.7 million of share-based compensation expenses in our cost of revenues and operating expenses from the accelerated vesting schedule of HUYA's pre-IPO options in the event of a change of control, pursuant to our 2017 share incentive plan and option agreement.
Operating income increased by 198% to RMB 201 million for the second quarter, and operating margin increased to 7.5% in the second quarter. Non-GAAP operating income, which excludes share-based compensation expenses, increased by 180% to RMB 326 million for the second quarter. Non-GAAP operating margin increased to 12.1% for the second quarter. Income tax expenses increased by 137% to RMB 51 million for the second quarter. Net income attributable to HUYA Inc. increased by 86% to RMB 227 million in the second quarter, and Non-GAAP net income attributable to HUYA Inc., which excludes share-based compensation expenses, increased by 106% to RMB 351 million for the second quarter. Diluted net income per ADS was RMB 0.96 for the second quarter, and Non-GAAP diluted net income per ADS was RMB 1.49.
As of June 30, 2020, we had cash and cash equivalents, short-term deposits, and short-term investments of RMB 10.7 billion, compared with RMB 10.3 billion as of March 31, 2020. The increase was primarily due to net cash provided by operating activities of RMB 512 million for the second quarter. That concludes the review of our second quarter financials. As you may have noticed, we did not provide specific quantitative revenue expectations for the third quarter. This change is in line with the practices of our largest shareholder, Tencent, and its consolidated subsidiaries. However, directionally, we still expect our revenues to continue to grow in the third quarter, both year over year and quarter over quarter. Also, here to update that we received a non-binding proposal letter from Tencent yesterday proposing that HUYA and DouYu enter into a stock-for-stock merger to be effective pursuant to applicable laws.
As a result of such proposal, HUYA or its subsidiary would acquire each outstanding ordinary share of DouYu, including ordinary shares represented by ADS, in exchange for a to-be agreed number of newly issued Class A ordinary shares of HUYA, including ordinary shares represented by ADS. The independent and disinterested members of the board will review and evaluate the proposed transaction. The board just received the non-binding proposal letter from Tencent yesterday, and thus no decisions have been made with respect to the company's response to the transaction. With that, I would like to open the call now to your questions.
Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the 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. To give more people the opportunity to ask questions, please keep yourself to no more than two questions at a time, and you may press star one again if you have a follow-up question. Thank you. Your first question comes from the line of Thomas Chong of Jefferies. Please ask your question.
[Foreign language]. Thanks, management, for taking my questions and congratulations on a strong set of results. I have two questions. My first question is about the cooperation with Tencent in the second half and any KPI that can be shared in the next few years given the solid progress is made in live streaming and eSports.
My second question is about the user trend. Can management share about the MAU and the paying user outlook in the second half? Thank you.
好的，我来回答一下第一个问题。就是我们跟腾讯其实一直有很深的合作了，然后腾讯控股了以后，我们会有更多的合作开展。首先，我目前已经在腾讯的多款游戏里面和产品里面接入游戏直播内容。对，然后我们预计未来几个季度还会接入更多的游戏内容。对，然后，另外的话是这样的，就是目前，比如说我们在腾讯的像 WeGame 啊、微信的游戏啊、QQ 游戏里面啊之类的，其实事实上的那个量其实我们这个季度同比环比的增长超过16%，但是这些其实都没有进入到我们的 MAU。对，这是内容这块。另外一块，是这样的，就是关于主播培养方面，我们现在在尝试在腾讯的一些游戏里面独家接入一键开播的功能，这样的话，一个用户在打游戏的过程中随时可以启动一键开播到 HUYA 这边进行游戏直播。对，然后另外的话是这样的，关于电竞赛事方面，我们其实不管是在版权内容，包括商业化合作以及新的用户体验方式的改进上面，我们跟包括腾讯在内的公司进行深度的探讨。对，然后剩下的就是技术方面了，就是这个在大数据和 AI 层面。我们这方面也借助了腾讯的很多关于游戏的数据，对，这些能够帮助 HUYA 平台的用户的个性化推荐，进行更精准的推荐。对，然后另外的话，目前云游戏方面，我们上的这些游戏也跟腾讯有大力的合作，也希望我们的云游戏平台能够尝试去寻找到直播跟云游戏结合的一个新的模式。
Okay, as a translation, regarding the cooperation with Tencent, actually before Tencent became our controlling shareholder, we have already got the existing deep cooperation with them. After they became the largest shareholder of HUYA, the cooperation has been deepened in various aspects, so it's been expanding over the past few months. In terms of the aspect of the cooperation, firstly, I would like to say that we have already been connecting to Tencent's games and products in the second quarter, and there will be more to come connecting with more of Tencent's games and products in the next few quarters.
Secondly, actually HUYA's live streaming content has already been connected in Tencent's WeGame, WeChat Game Center, and QQ Mobile Game Center, and the traffic that we gained from those channels has now been counted to the reported total MAUs. And this traffic from those external links actually got a quarter-over-quarter growth of 16% in the second quarter from Q1. And thirdly, in terms of the cultivating of the broadcasters, actually we have been cooperating with some of Tencent's games to test an exclusive service built within Tencent Games, which is called One Click Streaming Service, just so that when Tencent's gamers play games within Tencent Games, they can simultaneously live stream their gaming experience through a click of a button, and essentially they will become our broadcasters. And on the fourth respect, actually we're also working with Tencent in terms of cultivating the eSports tournament side.
In addition to copyright licensing, commercialization, and optimizing the viewers' experience by upgrading the product features, we are also in cooperation and communications with TJ Sports to see if there are any more of the new products or new features or new business models that can be applied to the eSports tournaments. And on the technology side, we are working with Tencent to drive the development of big data and artificial intelligence technology, and also we are trying to connect it to Tencent's database just so that with the data at hand, we can optimize viewers' personalized experience by personalized recommendations provided to them. And lastly, as you have noticed, we have recently launched our cloud gaming platform called Yowa, and currently the game titles that are covered by Yowa are of great support from Tencent.
So these are all the aspects of cooperation with Tencent, and Catherine will take your next question.
As to your second question, in terms of user growth and paying user growth, as Mr. Dong just mentioned, along with the strengthening cooperation with Tencent as well as our investments in content such as broadcasters, third-party eSports tournaments, as well as self-generated content, we believe that our users and paying users will continue to grow in the second half of this year. Hope this answers your question, and thank you. And next.
Your next question comes from the line of Lei Zhang. Please ask your question.
哦，嗨，管理层晚上好。恭喜强盛的业绩。我第一个问题可能还比较老生常谈，就是还想听一下管理层对竞争这方面最新的一个看法，尤其是我们的这个短视频的peers像快手最近也公布了一些游戏直播相关的数据，然后还有B站也有一个英雄联盟的主播权在下半年，所以这个会不会对我们短期跟中长期的一个增长都会有一点影响呢？我们怎么看这一块？然后第二个是财务方面的，我看到我们这个季度利润也还蛮好的，比预想的就是好还蛮多的，所以想知道就是可不可以给我们多提供一点，就是利润方面，尤其是我们主要的成本项，像是内容成本跟这个分成方面的一些这个quarter跟之后的一些趋势。谢谢，我自己翻译一下吧。 Thanks, management, for taking my question. Congrats on strong results. My first question is still regarding competition.
Could you share with us your updated view on the competition with short video players, especially like Kuaishou, which announced certain game streaming-related numbers, and Bilibili, which has broadcasting rights for League of Legends Championship. Do you see any near-term or long-term impact to our business? And secondly, it's about our profitability, which is much better than expected in second quarter. Can you give us more color on this, specifically the trend of your key cost items like content cost and revenue sharing? Thank you.
好的，我来回答一下这个第一个问题，就是这个短视频和B站的LPL，就是说这个快手做游戏直播其实时间也挺久了，当然B站时间也很久了。对，然后这个我们也能看到，其实在今年这两家公司在游戏直播上面都其实加大投入还挺多的。但是你能看到第一个，从数据上来说的话，事实上对HUYA的这个发展其实影响不是特别大，这是第一个。第二的话，我们看到就是说像类似短视频平台上面，我们看到其实他们主要的这个优势的品类是稍微会往手游上倾斜一点。但是HUYA历来在手游的直播上面，我们其实在行业的领先优势还是非常明显的。对，所以其实从我们目前的生态来说的话，不管是王者的直播以及和平的直播，对，我们看到就是说其实对HUYA的影响不是特别大。对，这是短视频这一块。然后另外一块的话，就是B站联赛，对，就是我们还在跟相关的方面正在谈HUYA这个也要分播的事情，就应该也是，对，就是还在沟通过程中。我们整体上认为第一个，我们肯定是希望就是那么好的赛事，我们也希望能够拿下来，这是第一个。第二个的话，我们也评估过，就基于目前今年的整个的情况，我们整体认为LPL对我们对HUYA的影响是可控的。因为就像刚刚其实我们也提到了说我们自办赛事的，我们自制内容的这个量，事实上我们看到从很多的渠道来说，包括DAU、拉新维度来说，我们事实上跟我们的第三方赛事加起来的量，对，事实上是一个同一个数量级。所以我们整体认为第一个，我们当然要争取拿下LPL，第二个的话，即使拿不下LPL，我认为对HUYA的影响也是不大的。
Okay, as a translation, regarding your question about the competitive landscape relating to Kuaishou and Bilibili, actually the two parties have been doing game live streaming for long, and recently we have noticed that they have increased their investments in producing and preparing for such content. But I would like to answer your question from two respects.
Firstly, from the data that we have observed and monitored, I think the impact from either Kuaishou or Bilibili is quite limited to HUYA. And secondly, we also noticed that they have an inclination to live stream more focused on the mobile games. And as you might know, we are quite strong in terms of streaming the mobile game titles, and we believe our competitive advantage of streaming mobile game titles is absolute, especially in broadcasting Honor of Kings and Peacekeeper Elite. So we don't really think the impact is that much. And about your question regarding the broadcasting rights for the World Final of 2020 League of Legends, what we can say right now is that we are still in active communications with such parties to get the sublicensing rights of broadcasting such eSports tournaments.
But firstly, of course, we would like to get the sublicensing rights of broadcasting World Final of 2020 League of Legends because it's a very excellent eSports tournament. But secondly, I would like to say that from what we have observed in the data monitoring, the new traffic or the user or the DAUs brought by the, if we don't get the sublicensing rights from World Final, the impact would be limited, especially considering that as we have just closed the prepared remarks, the self-produced content, whether in PGC or eSports tournaments, the new users and the DAU, those traffic brought by our self-generated content is already comparable to some of the exclusive eSports tournaments. So as a conclusion, we will try our best to get the sublicensing rights, but if we don't get it, we think it's still manageable. So Catherine will take your second question.
Regarding the margin improvement, our gross margin improvement is primarily from the savings in optimizing our broadcaster signing fees. In the second quarter, we have cut costs of the broadcasters who have relatively low price-to-performance ratio, both domestically and overseas, and thus we have pretty significant savings from the broadcaster signing fees. In terms of operating margin improvement, that was partially due to the operating efficiency improvement, and also we have received more government subsidies in the second quarter compared to the first quarter. Hope this answers your question. Thank you. And next.
Your next question comes from the line of Yiwen Zhang of Citigroup. Please ask your question.
哎，管理层晚上好。谢谢接受我的提问。我这边也是两个问题吧。第一想追问一下咱们跟腾讯的合作在用户端的一个表现吧。就刚刚提到咱们在WeGame，然后手Q微信游戏那边都有一些用户，然后我们有没有什么计划把他们变成我们的一个APP的用户呢？然后也想问一下他们的用户行为跟我们现有的APP用户有什么区别吗？然后第二想问一个假设性的问题，假如我们目前不考虑晋升的因素的话，我们怎么看待中国游戏直播的未来的一个发展，比如说整个用户群，或者有没有一些新的变现手段，然后我自己翻译一下吧。
Thanks, management, for taking my question. So the first question is regarding Tencent collaboration on user side.
You mentioned we have viewers on WeGame, which is WeChat Game Center, and also QQ Game Center, which are not included in our reported MAU. So any plan to convert these users into our app users? And also in terms of the user behavior, do we see any difference among these two user groups? And my second question is a hypothetical one. If we do not consider competition factor, how do we view the future of China's game live streaming, for example, the Huya user base and the new business model? Thank you.
我来回答一下。这个其实刚刚其实有提到过，就是说我们HUYA的内容有在腾讯的游戏和产品里面有展示。但是这个展示跟在HUYA APP里面展示可能比较大的区别，就是我们可能有一部分的互动的功能以及打赏的功能，在那边可能就是不是特别完整。对，所以这是比较大的区别了。所以这也是基于这个原因，我们目前并没有把这部分记录到我们的MAU里面去。当然我们其实也一直在跟相关的腾讯的相关的项目组在谈说我们是不是可以把在腾讯的内容的，比如互动之类的，把它的生态做得更加的丰富。对，甚至是包括说我们未来有没有可能在那边大家一起分成什么之类的。对，这是第一个。第二个的话，游戏直播的未来，就是说从国内维度来说，我其实觉得这是我印象中我之前有提到过的，就是说我们其实从目前看到，就是说自从短视频平台，尤其是短视频平台加入了游戏直播之后，我们能看到事实上我们的整个用户的新增用户的规模以及整个市场的容量事实上在快速的在增长。所以我觉得第一个，我们感谢短视频平台帮国内的游戏直播用户教育了很多的新的用户。对，我觉得这是第一个。第二个的话，我们也看到了今年上半年其实中国国内的游戏整个收入增长是最近几年最高速的。所以综合起来，我们其实认为就是说国内的游戏产业我认为在未来应该是一个发展非常良好的一个行业。所以我觉得宏观上来说的话，游戏直播借助于整个行业来说，它发展肯定是没问题的。这是第二点。第三点的话，就是我们能够看到随着电竞的逐渐的成熟，电竞慢慢变成游戏的一个标配。对，然后这个围绕着电竞，我们认为随着电竞的持续的发展，我认为对整个游戏直播行业都是一个比较大的利好。对，这是第二点。对，然后最后一点的话，就是其实从HUYA内部来看的话，我们是希望未来能够把游戏直播的业务形态跟游戏视频的业务形态进行非常好的结合。这样的话，就是我们的这个一个用户可以在HUYA这边满足到他不管是看直播还是看游戏视频的所有的需求。对，我相信这样的HUYA这边能够提供对最优质的游戏视频的内容也事实上有助于HUYA的用户的持续的增长。
Okay, as a translation regarding your first question about the resources and the traffic that we gain from Tencent external links, as we have just said, HUYA's live streaming content is now connected to some of Tencent's games and products, and the major difference of the experience that you will have in those external links and within HUYA's core app is that within those external links, those Tencent's games or products, the interactive feature and the virtual gifting feature will be limited. So the experience is not comprehensive. Based on this, we didn't count all the external links traffic into the reported MAU.
But we are still in active communication with related project teams of Tencent just so that we can enrich and diversify the content ecosystem within Tencent's games and products, and probably in future there might be a chance for us to share revenues with such related project teams in future. And secondly, your question on the competitive landscape, if hypothetically we didn't consider the new competitors, new entrants. Actually, we have been seeing that previously, with the new entrants of those short-form videos entering into the game live streaming industry, we have been seeing the new traffic and also the market size. Those two things have been growing after the new entrants of the short-form videos entering into the industry. And we actually are very much appreciating that they have been helping us to educate the users.
In the first half, the total revenue generated by the game industry is actually enjoying the highest growth rates that we have seen in the past few months. This sets us to the conclusion that probably for the game live streaming industry, if we don't consider other factors at play same, the future of the industry just based on the growth of the game industry, the future of game live streaming industry is already prospects in the future. My third point is regarding the eSports tournament. As we see popularity of the eSports tournaments in the industry over the past few years, it actually has already become a sensational activity among all the gamers and probably also a must-have experience of the gamers.
So we think with the help of the eSports tournament and its popularity, it's also going to be beneficial to us as game live streaming industry players. And also my last point is regarding the combination of game live streaming content and game video content, which we have been placing a lot of efforts in. So going forward in HUYA, what we would like to see is that one single user can actually enjoy a different dimension of content consumption on our platform, both in game live streaming and in game videos. And with the quality content in the video production, we think HUYA might have this chance to grow the user base and carry that into the next phase of growth. So thank you that's all for the questions. Please move on to the next.
Your next question comes from the line of Alex Liu of China Renaissance.
Please ask your question.
好，谢谢管理层。我有两个问题。第一个问题是还是想请教一下，就是我们HUYA其实讲云游戏讲一段时间，那想问一下就是既然和腾讯的合作之后越来越深入，想问一下在云游戏上之后会和腾讯有什么样的后续的合作，然后云游戏本身的商业化机会，然后咱们管理层怎么看？这是第一个问题。第二个问题就是还是想请教一下，接着刚才一个问题，就是主播签约费，我们长期来看，因为我们听到一些竞争对手的一些comment，可能他们的一些签约费现在也更多的是基于一些流水的排名。我想看就是主播签约费这项费用本身长期有没有，就是也变成一种可变成本的一个概念，也就是说长期来看我们的这个游戏主播的所有的这个费用给他的这个compensation都是一个基于流水的这么一个概念。
I'll translate myself. Could the management talk about or provide more color on how will HUYA work with Tencent more closely on cloud gaming and the potential commercialization model of cloud gaming going forward? And also secondly, just on the game host sign-on fee, where does the management see this cost item to stabilize in the longer term?
我来回答一下。云游戏其实整个的发展还是比较早期的。所以HUYA对云游戏的思路是这样的。第一个，我们希望一直要在这条线，我们一直要有持续的跟进。这是第一个。第二个的话，我们希望我们能够在今天把云游戏的用户体验真正的解决掉。对，所以其实从我目前维度来说，我们认为就是说云游戏的大规模的商业化，我们可能目前我们还起码从HUYA的维度来说，我们认为可能还需要打磨一段时间。对，这是第一个。第二个的话，但是我们从我们自己平台的用户的各种行为来看，我们其实认为云游戏未来，对，就跟主播直播的结合，对，我们看到类似的这个数据事实上是非常好的。所以我们对云游戏跟直播平台的结合这件事情我们还是非常有信心的。对，这是云游戏的部分。然后另外一个主播签约费的话，第一个其实从HUYA的维度来说，我们的主播的签约费跟他的流水事实上关系是不大的。我们的签约费更多的还是关注于主播提供的内容是否足够优质，对吧？所以我们的签约费更多的还是跟他的用户像类似的ACU、他的用户的流程这些质量的指标挂钩。对，我们的流水在我们的签约费里面目前的相对是不太重要的。但是我们也同意，就是说其实随着直播行业的发展，就是说尤其像头部主播过于依赖签约费，我们还是希望或者说能够把这个方式慢慢的做一些适度的引导。我们也希望我们能够把真正的就像电商直播一样，我们能够看到其实真正的主播，其实他的营收能力事实上也是非常好的。所以我们也希望能够引导大主播，除了签约费之外，能够逐渐的更多的去尝试，对吧？就是做一些商业化的尝试。这样就不光是对平台，对于主播本身长期发展也是比较有利的。
Okay, as a translation regarding your first question about the cloud gaming, actually the cloud gaming business for HUYA or even for the industry is at a very early stage. HUYA's mindset towards such business is that firstly we will keep a close eye on the industry in terms of development and catching up with the latest trends. Secondly, we will like to continuously optimize user experience for our cloud gaming platform.
From the data that we have seen right now, we think massive commercialization or massive monetization is still not there yet for HUYA or for the business. Secondly, from the data that we have observed in user behavior, we think the experience of cloud gaming platforms is at its best to be combined with the live streaming experience, which means probably in the future we will provide more interactive features to viewers' streaming experience by combining the content streaming together with the cloud gaming playing. That's for the cloud gaming business. Regarding your signing bonus trend, actually for HUYA's business right now, the signing bonus fee for the broadcasters is not related to the grossings that a broadcaster can generate.
It's more decided by the quality content one broadcaster can produce and also by the viewers that they can generate, such as operating metrics as ACUs or retention rates. But if we take a step back and review your suggestion like getting the grossings and the signing bonus fees together, we think for the top streamers in the industry, they are enjoying a very high signing bonus fee, and we are actually thinking about to guide them to contribute more to the monetization or commercialization of the platform. And I can cite an example for you is that in the e-commerce streaming business, actually the quality and the top streamers in the industry, they can generate a very good amount of grossings that they can contribute to the platform.
So we think it's a very good example to apply to the game live streaming and encourage those broadcasters, those top broadcasters to contribute more and to participate more into the commercialization and monetization activities of the platform. Thank you for your question. We can move on to the next.
Your next question comes from the line of Binnie Wong of HSBC. Please ask your question.
晚上好，恭喜管理层有个很强劲的业绩。那第二个问题想问问就是HUYA这个Quarter的MAU就已经超越了多余，也就是很强劲。那但是我们看发现也就是看成本上我们也没有加大投入，那我的margin还是有improve的。所以其实我想问问就是说这个很强劲的MAU增速是什么情况，什么原因的driver主要这方面。然后就是如果我们看下半年，你觉得就是在那个user acquisition方面，其实这个竞争比去年激烈，还是说因为现在可能之后合并之后，那这个会比较rational来一点.
We will just translate my question very quickly. So we observed that HUYA MAU surpassed the DouYu this quarter, and then also with that, margins have also continued to improve without much incremental cost. So what are the key drivers behind the strong user growth without much incremental cost?
And then if we look at the user acquisition strategy this year, do you see the competition has been rationalizing, and then so we should be able to see margins trajectory continue to be improving? Thank you, management.
I will answer first the question. In terms of MAU, the strong growth was mainly because in the second quarter, because of the pandemic has pretty much domestically in China receded, and most of the offline internet cafes have reopened. As we mentioned in the first quarter's earnings call, in the first quarter, because of the offline internet cafes have mostly been closed down, so we have lost some of the non-PC, non-mobile MAUs in the first quarter. And in the second quarter, that part of the users have picked up.
And in your second question, for the proposed merger of HUYA and DouYu, because we just received the proposal yesterday, and the independent and disinterested members of the board will review and evaluate the transaction. So from the board perspective, there is no decision so far. And we will update the investors if there are significant milestones and there is a decision to be reached. Thank you. And the next.
Your next question comes from the line of Wendy Chen of Goldman Sachs. Please ask your question.
嗨，早上好，我们看到这里面有三位，非常感谢接受我的提问。我就很快地问一个关于国际化的问题，就是我们在19年其实也提到我们在海外有了这个2000万的用户，然后我想请问一下我们现在国际化的主要的这个专注的地区是什么，然后以及在现在可能就是中国企业在出海之间可能会碰到一些就是相对来说，就比方说地缘政治各方面的困难的情况下，我们对于国际化的战略现在目前的这个有没有一些update，然后这可能会对我们将来的这个margin profile会有什么影响，因为毕竟国际化这方面还是一直是有一些投资在里面的。那我很快翻译一下.
Thanks for taking my question. So I just have one quick question on the international expansion part.
So, I'm wondering, can management share what is our geographic focus area for the international expansion right now, and whether we have any update on the globalization strategy with all the potential headwinds we have seen for the Chinese corporate overseas efforts, and also if there's update whether it will have any impact on our margin profile as we have been invested for international expansion? Thanks very much.
好的，我来回答一下。这个我们的海外市场就今年跟过去两年其实有个比较大的区别是，过去两年2018、2019年我们其实主要专注做用户规模。对，我们今年我们认为用户规模做到一定阶段之后，我们要重新地去审视我们的整个生态的健康，也就是说我们要去认真地考虑这个商业化回报。所以我们今年我们其实在这个HUYA的海外业务上面，我们在选择国家的时候，我们尤其关注这个在这个国家里面我们的投入和产出能不能有一个相对合理的一个比例。所以从这个维度来说，我们事实上我们这个美国目前我们这个基本上是没有进入的。然后像印度类似的，就是我们整体认为它的可能营收潜力还需要一段时间，所以我们目前在印度的投入也是非常的少。对，所以就是我们目前来说的话，我们事实上从营收维度来说，我们其实认为东南亚和这个对拉美我们整体认为未来潜力比较大。所以我们可能会在未来一段时间内我们还是持续加大东南亚和拉美这个类似中东这样的，就是我们整体认为就是商业化和我们的这个业务能够相对比较平衡发展的这个国家。
As a translation, actually the overseas business that we are deploying for this year is a little bit compared with what we have played in the year of 2018 and 2019. Because in the past two years, what we have been focusing more is on the market size growth. But entering into 2020, we have been carefully evaluating the healthiness of the ecosystem and also emphasize more on the commercialization and return on investment.
So in deciding which country for us to enter in this year, we focused more on exploring a more reasonable ROI, which is why we didn't really enter United States. And also speaking of India, since we believe the potential of revenue in India is quite limited, so we didn't really spend much money on that. We didn't really put a heavy investment in India. So that's for the business in those two countries. Speaking of the countries that we have focused on more, it's actually more centered in the Southeast Asian countries and Latin America, which we think is of great potential in both users and monetizations. And taking that together with Middle East, those are the areas that we will be focusing more in the near future, especially considering that those countries will have a balanced play between user growth and monetization. So that's your question.
Okay. Operator, I think it's about time, and I would like to thank you again for joining our conference call today. If you have further questions, you can reach the team at ir@huya.com, and we look forward to speaking with you in the next quarter. Thank you, Operator. We can conclude the call.
This concludes today's conference call. You may now disconnect your line. Thank you.