Ashley Wu: As for the operational and financial impact of the supplementary agreement, we reached a supplementary agreement on the legal — event in January this year through a friendly negotiation with the copyright owner and specifically in the year of 2023 throughout to 2025. In addition to LPL-related events, we added a copyright of key events such as the championship and Demacia Cup. In terms of the finance, the total cost of the event in the agreement covered will be significantly lower than that in 2022. At the same time, as HUYA will no longer have the right to sublicense LPL events, our revenue from copyright distribution will decrease. In general, we expect that the cost of the relevant events will decrease more than the reduction of the copyright revenue in 2023 compared with 2022, which is a positive effect on the overall cost structure of our company.
From the users’ perspective, as there are more platforms covering these events, we do not rule out that there is going to be some dilution in the population watching on our platform, but we believe that this overall impact is controllable, which will be conducive to better dissemination of the event itself and also help the vigorous development of e-sports ecosystem. There are still some top-tier copyrighted events and self-made events only available in HUYA. In addition, we continue to improve the viewing and interactive experiences in our platform for those events, which will be very competitive advantages for us to gaining users.
Operator: Our Next question comes from the line of Ritchie Sun from HSBC.
Ritchie Sun: I will translate this myself. My question is about the live streaming revenue recovery situation as well as the 2022 overall total revenue growth expectation.
Ashley Wu: In terms of live broadcast revenue, after the launch of the new policy last May, we subsequently implemented it according to the requirement and the impact of these adjustments on revenue mainly began in June. So in this case, the domestic live forecast revenue base in the first half of 2022 was relatively high. So we expect that the revenue in the first half of this year will be weaker year-on-year. Moreover, from a seasonal perspective, due to fewer activities and the Chinese New Year festival and other factors, Q1 is generally a off-season for live streaming revenue, and this year will also be affected by some factors after the COVID open up as well. So we hope that the revenue of subsequent quarters will gradually stabilize because on one hand, the year-on-year base will be better, and we are also continuing to polish our product and operational activities so as to enhance the monetization of our business operations, such as introducing some new interactive plays as well as optimizing the design of the virtual gift.
At the same time, we remain optimistic about the recovery of the overall economic environment and the launch of more games. A small part of our live’s revenue comes from our overseas business, NIMO. And due to the business optimization since last April, the revenue had experienced an year-on-year decrease since the second quarter of 2022. And at present, on the basis of continuing to strengthen the localized operation, we also expand NIMO’s entertainment content, which we believe will be conducive to generate improvements for our commercial performance and overseas revenue for our business. In terms of other revenues, with the recovery of market environment and the licensing coming up again this year, we believe that advertising revenue will have some opportunity to recover this year.
However, because of the supplementary agreement we signed in January, this will lead to some decline in our copyright revenue compared with the year 2022, we predict that the overall revenue of advertising and other factors may decline. At the same time, we are also exploring new business opportunities, including games and et cetera, hoping to get to some success.
Operator: Our next question comes from the line of Lei Zhang from Bank of America.
Lei Zhang: My question is about our video business. Can you give us some updates on this video business? And what is our production operation forecast for 2023?
Rongjie Dong: In terms of our video business, in terms of the content production, in addition to our live streamers, we also have a lot of video content creators joining for us, and we have been able to accumulate large volume of original materials for video content processing. And in addition to conventional editing tools, we also have AI real-time editing function that can analyze the live stream content in real-time through AI recognition technology and automatically capture the highlights in the live streaming processes to generate video clips which can provide effective support for video production of competitive games and events, and help to improve the creation, efficiency and enthusiasm of the users and streamers. In the year of 2022, the number of video uploads on HUYA has increased by nearly 50%, enriching the content that are available in our platform.
At the same time, as we continually optimize our video content ecosystem combined with immersive vertical screen viewing format, video content being embedded in the game community, our HUYA uses consumption of video content has also significantly increased. In the fourth quarter of last year, the penetration rate of video content on HUYA app reached a new high. At the same time, the total screen time on application increased by more than 40% year-on-year. So the development of our video business has promoted a community-based development of HUYA. And for an overall content ecosystem and HUYA, we believe that it will develop towards a pan-live broadcasting format and form an ecosystem for video consumption that will be further integrated with live broadcasting.
This will also help to increase the attractiveness of the platform to users. And in the long run, it would help us to expand the channels to obtain users and increase revenue. And for the year of 2023, we will continue to promote product upgrades, consolidate the advantages of HUYA’s core businesses and continue to promote video community. In addition, we’ll also attach importance to upgrading our operation capability for a pan-live streaming full-link services for the streamers, events and game companies, utilize our expertise in new games in streaming, events and game companies to provide more value for the operation and promotion of the games so as to prepare ourselves for the growth of our game-related service revenue in the mid and long term.
Operator: Our next question comes from the line of Felix Liu from UBS.
