Welcome to YY Inc.'s Third Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, we will have a question- and- answer session. Please note this event is being recorded. I'd now like to hand the conference over to your host today, Mr. Matthew Zhao, IR Director of YY. Thank you, sir. Please go ahead.
Thank you, operator. Good morning and good evening, everyone. Welcome to YY Third Quarter 2019 Earnings Conference Call. Joining us today are Mr. David Xueling Li, Chairman and CEO of YY, Mr. Bing Jin, CFO of YY, and Ms. Ting Li, COO of YY. For today's call, management will first provide a review of the quarter and then we will conduct a Q&A session. The third quarter of 2019 financial results and webcast of this conference call are available at ir.yy.com. A replay of this call will also be available on our website in a few hours. Before we continue, I refer you to our safe harbor statement in our earnings press release which apply to this call, as we will make forward-looking statements. Finally, please know that, unless otherwise stated, all figures mentioned during this conference call are in renminbi.
I will now turn the call over to our Chairman and CEO, Mr. David Xueling Li. Please go ahead, sir.
[Foreign language]
Thank you, Matthew. Hello, everyone. Welcome to our earnings call today. Our third quarter 2019 results are characterized with continued success in our group's globalization and AI technology-driven strategies. Our total revenues increased by 67.8% year-over-year to RMB6.88 billion, demonstrating our solid progress in three key areas. First, globalization efforts resulting in significant growth in both users and revenues. Second, technology advancement leading to increase in our user loyalty and operation efficiency. Third, content innovation revitalizing domestic business.
[Foreign language]
On the globalization front, we achieved significant progress in expanding the market reach of all four key products, which are Likee, imo, Bigo Live and Hago. Notably, Likee, our leading short-form video platform with global footprint, hit the milestone of 100 million monthly active users in the third quarter of 2019, representing a year-over-year growth rate of 413.4%. Such rapid growth in user base is a result of our relentless drive for content localization, innovative features, and AI technology enhancement.
[Foreign language]
Let me share more details on Likee. Short-form video has become the mainstream content format of choice for Generation Z users around the world, increasingly influencing their social values and lifestyles. As the second-largest short-form video platform globally outside of China, Likee is well positioned to capitalize on the growing market demand. To extend Likee's global footprint, during the third quarter, we continued to explore the best venues to localize short-form video content for diverse cultures, backgrounds, and values. For example, in Russia, Likee hosted an offline event called Likee Party Moscow in August. This event marked Likee's second anniversary as an international short-form video brand. The onstage performance dazzled more than 10,000 audience in the capital city of Russia.
Our success in organizing such local events in Russia demonstrates Likee's unique capability in establishing cultural connections among young users, inspiring their creativity and self-expression, and boosting their enthusiasm towards original content production. All of which in turn help us expand our brand influence, as well as strengthen our leadership in more global markets.
[Foreign language]
In addition to content localization, Likee also sought to attract and retain users through continuous introduction of new features and functions, including data visualization tools, collaborative travel vlog projects, AI-based image cropping, photo series, and face swapping features. These new features significantly lower the short-form video production entry barrier to users, became smash hits upon launching, and attracted millions of users worldwide to create and share videos with their friends.
[Foreign language]
Besides extending its own market reach, Likee was also successful in distributing its content in our instant messaging platform, imo. By granting access to Likee's short-form video feeds to imo users in over 45 countries and regions, we were able to increase our imo embedded short-form video monthly active users to 50.2 million during the third quarter of 2019. This is also a good example demonstrating the great synergies across multiple products.
[Foreign language]
Now let me share more colors about our progress with imo. In addition to video content, imo was also injecting additional innovative social features to enhance user stickiness and promote social interactions. As a result, in the third quarter, imo's communication services were utilized over 400 million times per day on average, while each user's average daily usage exceeded 38 minutes. As imo's user stickiness continued to grow, we were able to unlock its monetization potential through advertisements. As a result, imo's advertising revenues increased by 25% sequentially during the third quarter of 2019. To further establish imo as a world-class video-based instant messaging platform, we plan to continue cultivating a cross-platform operational model, diversifying content and services, and refining monetization tactics through both live streaming tipping and video and IM related advertisements.
[Foreign language]
Besides short-form video and instant messaging, our international live streaming platform, BIGO LIVE, also achieved solid progress both operational and financially. During the quarter, BIGO LIVE 's monthly active user reached a record-breaking level of 21.9 million, representing a 9.7% year-over-year increase. As BIGO LIVE secures its foothold in emerging markets, it is able to further expand into developed markets and grasp more opportunities. As a result, its revenue contribution from developed markets such as Europe, Americas, Japan, and other regions increased further to 26% in the third quarter on 21% in the second quarter of 2019.
[Foreign language]
All of our aforementioned business success is built on the foundation of our technology advancement. During the third quarter, we continue to incorporate AI-based recommendation technologies into our platform. Through our proprietary multi-target intelligent recommendation model and real-time exploration discovery model, we are able to characterize, manage, and distribute global short-form video and live streaming content more efficiently. Our multi-target intelligent recommendation model analyzes comprehensive user behaviors such as viewing, commenting, interacting, etc, to improve the relevancy and accuracy of our overall recommendations. The real-time exploration discovery model compiles and analyzes a massive amount of content generated by users each day to timely discover short-form video clips of top quality that could potentially become smash hits. As a result, the number of high-quality videos discovered by AI machines in September has more than doubled compared with June.
[Foreign language]
In addition to enhancing our recommendation capability, we are also leveraging software algorithms to improve our operational efficiency. For example, BIGO's encoder system, a technology we developed in-house recently, could automatically adapt and improve the live streaming video quality by over 10% without putting any extra strain on network or bandwidth.
[Foreign language]
Meanwhile, Hago, our casual game-oriented social media platform, has not only maintained its rapid expansion of user base, but also achieved meaningful progress in monetization. During the third quarter, Hago's MAUs increased to 32.3 million, representing a 92.4% year-over-year increase. Leveraging its past success in Indonesia, Hago was able to further penetrate into other markets such as India. In addition, Hago has paved a very clear path to monetization through its user group-based interaction model in its previously developed markets. We expect Hago to make profits in its previously developed markets in the fourth quarter. Going forward, we seek to increase Hago's user engagement and retention continuously on three fronts: expanding its casual game variety and quantity, accelerating its content-centric community development, and introducing new social features such as interest-based user groups.
[Foreign language]
While we are successfully implementing our growth strategy through globalization, we are also revitalizing our domestic live streaming business, YY Live, through continuous innovation and reinvention. As we keep close attention to the constantly evolving user entertainment demands, we have uncovered the growing user preference for variety shows. During the third quarter, we launched a partnership with Wowkie Zhang, [Foreign language], a renowned Chinese singer and songwriter, to add more content of variety show style to our library. Our effort has paid off handsomely. Wowkie Zhang's initial live streaming session attracted 7.2 million cumulative users and viewers, and 240,000 peak concurrent viewers. Our partnership with Wowkie Zhang continued to render success in producing premium live streaming content, attracting viewers and fans, shaping a new live streaming plus artist business model, and opening up another monetization trail for entertainment stars.
Since then, we have formed partnership with 13 additional celebrities specializing in variety shows.
[Foreign language]
Consistent with our efforts of incorporating variety shows into our live streaming content, we're also introducing new interaction features to provide our YY Live users an immersed variety show experience. Through the multi-person microphone relay feature and the multi-party PK function, YY Live can dynamically generate personalized variety show programs on a real-time basis. As a result, our YY variety show live streaming received stable and widespread viewership during the daily premium time slots, thus leading the industry charge in fan entertainment innovation.
[Foreign language]
In summary, we achieved substantial success in globalization, AI technology enhancement, and revitalization of our domestic growth engine. Going forward, we envision vast market potential for our global video-based social media platform. We are confident that we can continue to deliver consistent and superior shareholder value through the synergies across our multiple product and markets, continuous efforts in globalization through localization, and enhancement of our operation efficiency. With that, I will turn the call to Bing Jin, our CFO, to go through the details of our financial results. Now as YY CFO, I will talk about the financial results. We continued to deliver robust financial and operating results during the third quarter of 2019. Total net revenues for the third quarter increased by 67.8% year-over-year to RMB 6.88 billion, exceeding the high end of our previous guidance range and Street expectations.
Specifically, live streaming revenues for the third quarter increased by 66.2% year-over-year to RMB 6.47 billion, mainly driven by the continued growth in live streaming revenues from the YY and HUYA segment, as well as the consolidation of BIGO, which contributed RMB 1.42 billion in the quarter. Other revenues in the third quarter increased by 98.3% to RMB 408.3 million, driven by higher advertising revenues from both HUYA and BIGO. Cost of revenues for the third quarter increased by 76.2% year-over-year to RMB 4.71 billion. Revenue sharing fees and content costs increased to RMB 3.46 billion in the third quarter from RMB 2.21 billion in the same period of last year as a result of increase in live streaming revenues of the company.
Bandwidth cost increased to RMB 496.8 million from RMB 249.5 million in the same period last year, mainly reflecting the continuous expansion of our global user base and time spent following the BIGO consolidation. Gross profits for the third quarter increased by 52.1% year-over-year to RMB 2.17 billion. Gross margin was 31.5% compared to 34.8% in the prior year period. The decrease in gross margin was caused by increases in both revenue sharing fees and content costs. In addition, both HUYA and BIGO had lower gross margins, but contributed a significantly greater portion of the net revenue in the third quarter of 2019 compared to the prior year period, which also contributed to the gross margin contraction. Operating expenses for the third quarter were RMB 2.16 billion compared to RMB 864.7 million in the prior year period.
This increase was primarily due to higher sales and marketing expenses, which reached RMB 1.08 billion in the third quarter. The increase in sales and marketing expenses was primarily attributable to our increased effort in sales marketing activities in overseas markets, as well as the impact of depreciation and amortization related to the consolidation of BIGO. R&D expenses for the third quarter rose to RMB 673.1 million from RMB 314.1 million in the prior year period, mainly due to the increase in staff-related expenses. GAAP operating income for the third quarter was RMB 160.3 million, compared to RMB 610.9 million in the prior period. Operating margin for the third quarter was 2.3%, compared to 14.9% in the prior period, primarily due to the decrease in gross margin, the impact of depreciation and amortization related to BIGO consolidation, and other overseas expansion initiatives.
Non-GAAP operating income, which excludes share-based compensation expenses, impairment of goodwill and investments, amortization of intangible assets from business acquisitions, was RMB 611.4 million in the third quarter, compared to RMB 774.2 million in the prior period. Non-GAAP operating margin for the third quarter was 8.9%, compared to 18.9% in the prior period. GAAP net income attributable to continuing interest of YY for the third quarter of 2019 was RMB 109.9 million, compared to RMB 650.7 million in the prior period. Non-GAAP net income attributable to the continuing interest of YY was RMB 574.1 million, compared to RMB 787 million in the prior period. Non-GAAP net margin in the third quarter of 2019 was 8.3%, compared to 19.2% in the prior period. Diluted net income per ADS in the third quarter of 2019 was RMB 1.11, compared to RMB 10.01 in the prior period.
Non-GAAP diluted net income per ADS was RMB 6.42 compared to RMB 12.07 in the prior period. Looking forward to the fourth quarter of 2019, we expect our net revenues to be between RMB 7.32 billion and RMB 7.52 billion, representing a year-over-year increase of 57.7% - 62%. This forecast reflects our current and preliminary views on the market and operational conditions, which are subject to change. That concludes our prepared remarks. Operator, we would now like to open up the call to questions.
Certainly. 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 do ask the question, please state your question in Chinese first, and then repeat your question in English. We would also like to ask that you limit your questions to one at a time. Our first question comes from the line of Thomas Chong from Jefferies.
[Foreign language]
I have two questions. The first question is about BIGO. Given that BIGO demonstrates very strong user growth as well as geographical coverage, can management talks about the KPI in terms of user and revenue across our different product offerings BIGO LIVE, imo, and Hago in 2020? My second question is about our AI capabilities. Given that our AI capabilities is getting so strong right now in getting the user traction, retention, and providing very personalized content, can management share about what other areas or how we can further strengthen our AI capabilities in 2020 to attract more user growth and retention in domestic and overseas markets? Thank you.
[Non English-Content]
[ Foreign language ]
Thank you for your question. This is David. Firstly, in terms of our international strategy, we actually have been implementing our current international strategies about two years already. If you look at our global product map, we actually have three major product, which is Likee, imo and BIGO LIVE. If you look at the third quarter results, which already demonstrate the very strong synergies between the three different platforms. Looking into next year, we will quite confident firstly in terms of the imo's strong support, in terms of the short-form video content from Likee distribution within the imo's platform. Meanwhile, the social relationships within imo also will significantly help our further content distributions within the different platforms. Meanwhile, on the other side, the monetization experience coming from BIGO LIVE also will continue to help both imo and Likee to further explore the monetization opportunities.
In summary, we truly believe the synergies among all the three platforms, as well as with further exploring of the users' social relationship within the three platforms, definitely will continue to help us to grow our international business with a very prosperous future. Thank you.
[ Foreign language ]
The second question in terms of the AI development. The major reason why the companies really focus on to develop the short-form video content is because if you look at the nature of the short-form video platform, it actually has been embedded all different types of the AI-related technologies there. It could be divided by the three parts. The first one is relatively traditional, what we call the recommendation systems. We continue to develop our personalized recommendation capability to recommend the more targeted content into the users. The second part is content engine. It's majorly focused on how to better recognize, explore, as well as re-editing of different types of content.
We truly believe that part of the technology will continue to develop, and we will have more competitions within that sector. Especially, all the peers will compete each other in terms of which peers can deliver the better content search engines, in terms of how to have a deep understanding of the content, as well as the relevancy and the logic within those kind of content. We truly believe we are one of the best within the industry as well.
The third part, and most importantly, is AI also will back to further develop and help of the evolution of the search engines. We truly believe in the next several years, short-form video content will become the major content format in terms of to guide people education as well as informational. In the future, a lot of different types of information and knowledge will reserved, produced as well as searched in the short-form video products. We truly believe after a decade, it will be a totally different world. The Generation Z, all the young people, they will majorly using short-form video as a major way to get access of the information as well as get educated. We are still very excited about the future development. Thank you.
Thank you.
Our next question comes from the line of Daniel Chen from J.P. Morgan. Please go ahead.
Hey, good morning. Thank you for answering my question. Congratulations on the strong performance. I want to ask about Bigo Live's revenue. This quarter, revenue seems very strong, up 25% year-over-year. I want to ask, how much of this comes from BIGO LIVE , and how much comes from other products like Likee and imo? If we look at it by country, does revenue grow more in developed countries or developing countries? How do we see the growth trend of BIGO LIVE 's revenue in the next few quarters? I will translate myself. My question is related to BIGO LIVE revenue, which grows very strongly this quarter, up by 25% quarter-over-quarter. How much of that actually come from BIGO LIVE , and how much come from other products like Likee and imo? What's the drivers behind? Is it more from developed country or developing country?
How should we think about the revenue growth trajectory of BIGO in the future quarters? Thank you.
Thank you, Daniel. This is Bing. Let me address those questions. For BIGO LIVE and imo and Likee's monetization, the super majority of revenue is coming from BIGO LIVE. imo, as we mentioned, they have some revenue from advertisement, which increased by 25% quarter-over-quarter. On an absolute dollar term, it's still much smaller than BIGO LIVE's livestreaming revenue. Likee is in very early stage of monetization. Likee will continue to explore monetization, both from advertisement and livestreaming. In terms of absolute dollar value, it's very small. To give you a picture, that majority of revenue from BIGO segment is from livestream of BIGO LIVE. That's the first question.
Second question, in terms of the country breakdown, we are seeing obviously more rapid growth from developed world, as we mentioned in the call, that 26% of revenue is coming from developed world, including U.S., Europe, Korea and Japan, et cetera, compared with 21% last quarter. Obviously, developed world will contribute more and more portion of the revenue. Meanwhile, Middle East and Southeast Asia market are still the mainstream monetization regions currently. For the future forecast, I think that is consistent with what we discussed with all the analysts and investors before. I wouldn't go into detail, but we are confident that BIGO will continue to maintain that revenue growth. Obviously, additional lever will be coming from further synergies into imo and Likee.
Thank you.
Our next question comes from the line of Natalie Wu from CICC. Please go ahead.
Hey, good morning. Thank you for taking my question. I have two questions. The first question is about Likee. Congratulations on Likee exceeding 100 million mobile MAU. I would like to know, in the top 5 cities for Likee's MAU, what is the highest penetration rate compared to the mobile internet user population in those cities? What we see now is that in many markets, there is a common phenomenon: when the penetration rate reaches a certain point, the subsequent growth tends to be more explosive. I would like to ask, for Likee, in which market do you think this point will occur first, and when might it happen? This is the first question. The second question is simpler. I just want to understand, Mr. Xueling, what will be the allocation of your energy for the next year? I will translate myself. I have two questions here.
First one is about Likee. Firstly, congratulations on Likee exceeding 100 million mobile MAU. Just wondering what's the highest penetration rate in your top five cities for Likee on top of the mobile internet user population. What do you see as a tipping point for the explosive growth in the same region for Likee? Second question is for David. David, just wondering what will be the resource or time allocation for you next year? Thank you.
Thank you, Natalie. I'll address the first question, and then Xueling, David will address the second one. In terms of the Likee MAU, you're right, we achieved over 100 million MAU. In the top five countries, those, as we said before, are India, Indonesia, Russia, and some of the other developed and emerging markets. You ask about the penetration rate. What I can tell you, if you look at the industry landscape, all the short-form video markets in global markets, except China, are very, I would say, relatively low penetrated. My take would be less than 10% penetration in terms of mobile internet users. From that perspective, we are seeing massive opportunities and potential across all those emerging markets and developed world. As David mentioned in the last question, that we truly believe short-form video is just starting to take off globally.
We're very excited in terms of the penetration future market potential.
[ Foreign language ]
This is David. Let me address your second question. We truly believe in the next year or even the longer period, our key focus as well as major energy allocation will be into the short-form video arena. Based on our understandings, definitely the short-form videos will further improve our comprehensive capabilities for the whole companies. That's also the major reason why we took the short-form video as one of the key strategies for the corporation. If we look at the international development in terms of short-form video content, we truly believe in the future, it will be similar as China, which means every person will be using the short-form video apps. The ultimate penetration rate for the short-form videos will be very similar as social media or even social network products. This trend actually already happened in China.
I'm afraid actually for the rest of the world, probably a lot of people still question that in terms of the future of short-form videos. Based on our understandings, we truly believe this is a historical opportunity for the company. In the next one to two years, we will continue to develop our short-form video apps in order to catch those massive market opportunities. That's the first part. Second part, after we have a development of the short-form video content as well, it also will back train our AI capabilities and train our teams. As I mentioned previously, the short-form video actually has been used in most of the AI capabilities in the market. If we look at the nature of the short-form videos, it is actually already quite similar as the real world. The only difference will be a camera.
The understanding about short-form videos will also represent the understanding of the real world through the AI capabilities. Once the industry leading of the AI capability has been established, that actually gives us more opportunities to grab the future opportunities within the sector. That's the major reason why we will keep most of our energies focused on the short-form video development in the future. Thank you.
[Foreign language]
Our next question comes from Lei Zhang from Bank of America. Please go ahead.
[Foreign language]
Congrats on the strong results. My first question to you on the overseas competition, maybe with TikTok. I want to hear management's updated view on the competitive dynamics and your recent user trend in user acquisition and next year short video spending overseas. [Foreign language] Thank you.
[Foreign language]
This is David. Let me address your question. In terms of the short video competition, we have to agree the year 2019 is the most of the difficult year for us. The major reason behind that is firstly, if you look at our short video platform's history, we're actually much shorter than other of the major peers within this sector. We only developed about two years compared with other peers already existing in the market like five years. Meanwhile, in terms of the recommendation capability behind the short video platform, our peers even had the longer the experience, which is more than eight years. Meanwhile, in terms of the sales marketing spending on the full year of 2018, our major peers also has more than five times of the sales marketing expenses compared with Likee in the last year.
Put all those factors together, 2019 is, I would say, the most of the difficult year for our short video platform development. Meanwhile, even we facing those kind of difficulties, but the Likee market share continue increase. In the third quarter of this year, as we mentioned before, our overall short video MAUs has been reached to 150 million in outside of China, which is already amazing scale for the short video user base already. We truly believe, especially followed by the AI as well as other technology capability continue improved. Definitely looking into 2020, the competition pressure for us will be significantly eased. Except for that, I also want to mention imo, our IM products. For the IM product, currently we only allow the users to watch the short videos.
In the future, once we start to allow and encourage the users to produce and upload more short video content using imo, we definitely can leverage imo's very strong social relationships to further boom of the activities as well as the viewership of the short videos within the IM products. All in all, this year we actually focus on to continuously solidify our fundamental capabilities, especially AI capabilities. Next year, once we see more users growth, definitely we will see those kind of capability will continue to help us to grow the short video platform. Thank you.
[Foreign language]
The second question related to the regulatory risk in overseas. You know, the difference in terms of our short-form video platform compared with other peers is Likee starting from day one, we were a global company. We really focus on to understand of the demands of the global users.
Compared with most our peers is their short-form video business oriented from the China business. It's very different. Since we actually starting from a global company, so even starting from day one, we really focus on the compliance as well as the deep understanding about the local regulatory as well as the local government requirements. That is behind that, so that can help Likee to build up more mature of the policies and the technical actions in terms of to better protect the user privacy as well as the overall data protection. All in all, we believe, in terms of the regulatory risk globally, we are better than most our peers. Thank you.
[Foreign language] Thank you, very helpful.
Thank you. Our next question comes from Alex Liu from China Renaissance. Please go ahead.
[Foreign language]
[Foreign language]
Given the fact we have multiple different products within BIGO umbrella, namely imo, Likee, and also BIGO LIVE . Would the management share a bit of a color on the user acquisition cost across different products at the moment? Thank you.
Alex, thank you. Let me address those questions. The first question regarding sales marketing expense for BIGO. We did see that the third quarter, the sales marketing expense is relatively lower compared with second quarter, because we are seeing very healthy pattern for our user retention. As David mentioned, that we start with small base, we are seeing more rapid progress in more emerging markets and developed world. We'll continue to monitor our user retention as well as the balance of the growth for the user base and the marketing spending. In 2020, David did mention that our pressure will be less, but that doesn't necessarily mean that we are going to spend less money for sales marketing.
It just means that we are seeing more opportunities. Once we see that pattern, meaning user retention pattern continue to be healthy, we are confident to spend more dollar value to attract more users to build a bigger ecosystem.
Meanwhile, we are also focused on monetization on the Likee, as I mentioned, we will monetize through live streaming and advertisement to really leverage synergies among different product. That's I would say the trend that I can foresee for BIGO sales marketing. For the user acquisition cost, it is different across different product. For imo, our key focus right now is to focus on enhancing the quality of the content into imo, rather than spend sales money to attract more users. I think in near term, we are focused on content quality enhancement for imo.
For Likee, as I said, it differs from country to country. It differs according to different stage of development. We cannot share a single number for Likee's user acquisition cost. For Bigo Live, we've been doing BIGO LIVE for quite a long time, I'd say it's a relatively stable business. We will continue to do sales marketing for BIGO LIVE users, but it's not on a big scale compared with Likee. That's, I think the colors I can share.
[Foreign language] thank you.
Our final question will come from the line of Jialong Shi from Nomura. Please go ahead.
[Foreign language]
I have two questions, and first question is about YY Live, the live broadcasting business in China as we are approaching year-end.
I just wonder if management can share any colors as to the potential growth rate YY Live could achieve next year. Also just wondering if the management see any changes in the competition landscape in China's live broadcasting business that is caused by new entrants such as Douyin and Kuaishou. My second question is about YY's relationship with the game live broadcasting subsidiary Huya. As we are approaching the two-year anniversary upon which Tencent will likely become a majority shareholder of Huya. I just wonder if we should expect to see any changes in YY's relationship with Huya before and after the divestment, as Huya is also talking about expanding into a broad category of non-gaming entertainment contents, which could potentially make it a competitor to YY in China and overseas market as well.
Just wonder if YY currently has or will sign a non-competition agreement with HUYA post the divestment. Thank you.
[Foreign language]
This is COO Li Ting. Let me address your question. Firstly, in terms of the competitive landscape with the short-form videos in China, we all agree the short-form video product is a very comprehensive product, which can have an impact with the different types of the services or product at the same time. That's also the major reason why we develop the overseas short-form videos. For the China part, we already noted the trend. For example, in terms of the new music distributions, the short-form videos such as Douyin already become the mainstream platform, which is already impact of the traditional music distribution channels. Another good example is, since the short-form video has occupied a lot of users time as well as the interactive features, that is why it also has some of the impact for the stranger social network.
By comparison, since the live streaming business or live streaming platform has a very stickiness of the user feature as well as the immersive user experience. That is why if you look at this year's YY Live development, although we facing the competition from the short-form videos, but we actually keep the very stable of the growth for the overall YY Live's revenue. We expected next year also have the similar situation.
Meanwhile, worth to mention is for this year, the paying user number for YY Live also has been significantly improved, demonstrates a very healthy trend for the whole platforms. All in all, in the future, in terms of our live streaming business in China, especially since we continue focus to create more diversified content as well as to create the different types of the interactive features, definitely we are still very confident in terms of future YY Live's development. Thank you.
Jialong, I'll address the second question regarding our relationship with HUYA. First of all, we still very favorable look upon HUYA's potential as China's leading game live streaming platform, and also the enormous esports market opportunity. We will continue to support HUYA and consolidate HUYA until the point where Tencent can exercise the option, which is coming from March next year to March 2021. If they exercise the option, we can obviously consider sell a portion of HUYA shares to Tencent. Regarding your second question for the competition of HUYA's non-game live streaming, meaning entertainment live streaming business with YY, I don't think that's a big issue. As I explained before, both in China and overseas, entertainment live streaming is never a zero-sum game market. The market opportunity is enormous, both from the supply side and demand side.
On the supply side, we have seen more and more ordinary people becoming popular online live streaming stars. The abundant supply will continue to drive more and more hosts coming into different entertainment live streaming platforms. On the demand side, even in China with this huge competition, as you have asked the question, YY Live will continue to grow. Overseas, it's a very early stage for entertainment live streaming. I don't think competition within entertainment live streaming is a big issue.
Thanks, Bing Jin. I'll ask a quick follow-up. How are you going to use the cash proceeds to be received from the sale of HUYA shares?
We can have a range of options, depending on the ROI of different alternatives. I think our strategy right now is to remain flexible. Obviously, we also pay attention to the shareholder value. Meanwhile, we're also trying to find new ways of generating high ROI project for ourselves.
Thank you for the color. Thank you, Bing Jin.
Thank you.
Thank you. I'd now like to hand the conference back to management for closing remarks.
Thank you, operator. Thank you for joining our call. We look forward to speaking with everyone next quarter. Thank you.
Thank you.
Thank you.
Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you so much for your attendance. You may now disconnect.