Q4 2023 Douyu International Holdings Ltd Earnings Call

Participants

Lingling Kong; IR Director; DouYu International Holdings Limited

Hao Cao; VP of Finance; DouYu International Holdings Limited

Brian Gong; Analyst; Citigroup Inc.

Lei Zhang; Analyst; Bank of America Merrill Lynch

Raphael Chen; Analyst; BOCI Research

Derek Fei; Analyst; Morgan Stanley

Presentation

Operator

Good morning and good evening, ladies and gentlemen. Thank you and welcome to DouYu International Holdings Limited's fourth quarter and full year 2023 earnings conference call. At this time, all participants are in a listen-only mode. We will be hosting a question-and-answer session after management's prepared remarks. I will now turn the call over to the first speaker today, Ms. Liling Kong, IR Director at DouYu, please go ahead, ma'am.

Lingling Kong

Thank you. Hello, everyone. Welcome to our fourth quarter and full year 2023 earnings call. Joining us today and Mr. Mingming Su, Chief Strategy Officer; Mr. Hao Cao, Vice President of Finance; and Mrs. Simin Ren, Vice President from the Interim Management Committee. You can refer to our fourth quarter and full year 2023 financial results on our IR website at ir.douyu.com. You can also check a replay of this call when it becomes available in a few hours on our IR website.
Before we start, please note that today's call may contain forward-looking statements made pursuant to the Safe Harbor provision for the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and observations that involve known and unknown risks, uncertainties, and other factors not under the company's control, which may cause actual results, performance or achievements of the company to be materially different from the results, performance, or expectations implied by these forward-looking statements.
All forward-looking statements are expressly qualified in their entirety by the cautionary statements, risk factors, and the details of the company's filings with the SEC. The company undertakes no duty to revise or update any forward-looking statements for selected events or circumstances after the date of this conference call. I will now speak on behalf of our Interim Management Committee on business updates and the call will be handed to our Vice President of Finance, Mr. Hao Cao, for financial discussion.
The year 2023 continue to be fought with challenges. Amid this backdrop, we remain fully committed to executing our long-term growth strategy of fostering a vibrant, diverse, game centric content ecosystem, wealth by our advertising content across our platform. We deepened our cooperation with game developers to enhance commercialization while adjusting our revenue and marketing strategies to be more ROI-driven. At the same time, we continuously optimize costs and expenses.
As suggesting net level, we successfully transformed losses into gains, achieving our adjusted net profit of RMB154 million for the full year of 2023. In addition, we continued to place significant emphasis on compliance management and regulatory improvements across our platform. These efforts are dedicated to continue to nurture our platform's ecosystem with enhanced compliance, healthy growth, and sustainability.
Navigating the complex and the evolving macroeconomic dynamics and operating landscape, we proactively tackled short-term platform challenges in the fourth quarter. We fully enhanced our compliance efforts to ensure a steady stream of premium content output and effectively maintain the overall stability of our business operations.
In the fourth quarter of 2023, our mobile MAUs were RMB51.7 million, and our quarterly paying users was 3.7 million. With 2024 underway, we are zeroing in on harnessing our three core strengths, deeply rooted streamer resources, a rich content ecosystem, and close cooperation with game developers. In doing so, we can ensure operating stability and add healthy development across our platform. First, we are building on our deep-rooted streamer resources by intensifying our cooperation with game developers and content on operation fronts.
There, we are continuously produce premium content and upgrading content operations. Cementing and advertising DouYu's value as a vibrant game centric content ecosystem. Additionally, we will heighten our efforts to diversify our revenue streams. We will accomplish this by collaborating with more game developers on commercial endeavors and by bringing promotions and game sales to even more gaming segments through diverse business partnership models.
At the outside of the year, we also streamlined our organizational structure, transforming our pivotal content ecosystem business units into three core divisions comprising streamers, content, anyone and game developers. With the formation of this primary union, we believe we can further improve our operating efficiency by integrating and utilizing our key resources.
Moreover, leveraging our ongoing efforts to enhance compliance standards and execution across the platform. We will further refine our revenue structure to improve the quality of our revenue streams and continuously optimizing cost and expenses. This initiative provide us with better agility to navigate the evolving market dynamics and challenges fortifying our company's foundation for long-term development.
With that overview, I'd like to review some details of our business operations during the quarter. In the fourth quarter of 2023, our mobile MAUs were RMB51.7 million, showing stability on a sequential quarter basis and a decrease of 9.9% year over year as we fine-tune our user acquisition strategy. As you may recall, beginning in early 2023, we began emphasizing user quality and cutting back our low ROI marketing spending, which quickly reduce the customer acquisition expenses.
On a year-over-year basis, this led to a lack of user acquisition from promotional channels and the decline in MAUs. Quarter over quarter, on the other hand, MAU performance exceeded our expectations given the high base in the third quarter summer peak season. Our effective content driven growth strategy continued to attract and retain high-quality users, supporting any use stability quarter over quarter.
Specifically, we were able to attract new users and boost user retention through the continued development of our platform's diversified commercial initiatives, promotions of game version updates, and new game team and operational activities feature high-quality streamers.
Second, we rolled out an entry of exclusive features and content offerings during official gaming events forecast, which activated user engagement. This quarter, we broadcasted over 30 large scale official e-sports tournaments, including the S13 League of Legends World Championship, Dota 2 TI12 International Championship, King Pro League Challenger Cup and the Championship, [KOF Five Star] 2023, China Regionals and World Championship, as well as the exclusive Valorant Championships Tour 2023.
In terms of term and content operations, in addition to our derivative commentary and reveal programs, we upgraded real-time interactive features to further boost user engagement. For example, during the League of Legends World Championship, we introduced a professional data scoreboard in our live streaming sessions, allowing hardcore gamers to quickly access the strength of players and teams.
Moreover, we have intensified our investment in interactive features alongside the [MOAT fall list] a best and worst player voting feature initiated during the LPL Summer Split, we added a player rating section, enabling users to rate and comment on players after each game fulfilling users' desire for frequent interactions.
In addition, during the official gaming events co-streamed live commentary, the player rating feature garnered highly positive feedback from streamers, enabling streamers to rate players, enhance user emotion, and enjoyment in the viewing experience, fostering lively discussions and heighten engagement.
Moreover, we have pretty actively expanded our presence in new of facial e-sports tournaments, for instance, with Valorant, a new game known for its competitive appeal and captivating gameplay sense to our attentive operations during the game's initial launch and our hardcore user base.
In addition to regulatory tournaments like Valorant's CN Evolution Series, we secured the exclusive live streaming rights to [TAEM] Valorant Global Invitational featuring top-tier teams and enrich user experience with a wide area of premium e-sport content. Upon comprehensive evaluation of our e-sports content offerings across the platform, we promotely adjusted the balance between copyrighted tournaments and self-produced content, achieving synergistic integration of our premium content offerings, while effectively balancing all our content cost.
Throughout the fourth quarter, we produced over 60 gaming events, including the KPL Academy Tournament 2023, aligned with KPL official events, the S10 Teamfight Tactics Group Tournament, highlighting female streamers, and the [EBIT referment] of Genshin Impact continuous series alongside other high-caliber self-producing events. Beyond operating content gaps during of official events off-seasons ourselves to produce events serve as pivotal platforms for talent discovery, streamer cultivation, and enhancing user engagement and interaction. In terms of premium content promotions, we reinforced the synergy between platforms online content and offline initiatives.
During the quarter, we organized offline activities, S13 offline watching for the League of Legends World Championship and [Peaceful Adventure] for the PEACE cable segment. Leveraging the momentum of high-traffic events of League of Legends in 2023, we created an area of offline game watching gathering featuring top-tier gaming streamers and entertainment streamers. This innovative model, integrated pregame variety show live streaming, offline, e-sport find challenges, and immersive offline game viewing, presenting gamers with a fully immersive, all-inclusive e-sports content journey.
Furthermore, it catalyzed the convergence of gaming in prime entertainment, [Franslec] We also capitalized on in-person engagement for the PEACE Cable gaming segment to enhance promotions. By introducing new redemption in-game items for gaming members, streamers competing offline task gained the ability to unlock limited offerings on in-game items. To those targeted content offerings and interactive user experience, we advanced the promotion of our game's specific membership service.
Let's turn to our monetization. Our total number of paying users in the fourth quarter was 3.7 million with a quarterly APU RMB278. The decrease in the number of paying users seems from our strategic shift at the start of 2023 to deliberately reduced revenue generating activities and low margin sales promotions. Instead, we began focusing on enhancing the operating efficiency of revenue streams while fostering a healthy and sustainable game-centric community ecosystem.
This transition resulted in a year-over-year decline on our paying user base. Furthermore, with the macro level, consumer sentiment gradually waning in the latter half of 2023, we strategically scaled back our platform wide promotion activities in the fourth quarter. This adjustment also impacted the scale of paying users for the period. While we continue to maintain our core paying user base, given the current consumer sentiment, we offered some modest delay price to revenue-generating products to accommodate the spending habits of mid and long-tail users.
Therefore, our quarterly APU marginally declined year over year and quarter over quarter. Over the past few years, we have been exploring ways to diversify our revenue stream. Thanks to our innovative commercialization initiatives, the contribution from other revenues in 2023 significantly increased year over year. In 2024 revenue diversification remains one of our focuses and we will prioritize collaborative commercialization ventures with game developers.
First, mark DouYu users a hardcore gamers with good appetite for game port. Second, Prairie Wave sales campaigns for game ports, not only diversifying our revenue streams, but also boosted traffic on our platform. This suggests strong user interest and engagement in these activities, highlighting the robust alignment between user demand and sales for in-game item.
Given this insight, we intend to deepen our partnerships with more game developers, determine and promoting various approaches to commercialization for game port tailored to diverse game genres.
Moving onto our technology R&D, we introduced a major version update to the DouYu in November in 2023. The update strengthened interactive functionalities between streamers and users, ways in our game centric content ecosystem, further enhancing our own engagements. We introduced a new path called The Bus on the main interface providing users with real-time updates on streamers they follow, such as live streaming status and access links as well as non-live streaming updates on streamers and [you back] host.
This feature allows users to engage with streamers and leave comments even outside of livestreaming sessions. Additionally, it fosters interaction among users who follow the same streamer weighs in that streamer's communities.
Furthermore, we have continued to strengthen our compliance self-assessment procedures and further centralized compliance management across the platform. This ongoing effort includes enhancing compliance standards on various fronts such as products, operations, and content moderation. We have been implementing strict compliance efforts, in particular, starting this year, we have intensified efforts to combat behaviors while raising our platform rules and policies.
This is a major measure, showed very good results with regular public announcements on our website. In the meantime, we will continue to comprehensively implement project risk provision and control mechanism while establishing product tracing procedures. Additionally, we have enhanced our interactive anti-addiction systems, prioritize the distribute complaint resolution, conducted regular reviews of great risks across the platform and ratified in regular behaviors, reinforcing risk awareness among all relevant staff.
In summary, throughout 2023, we fine-tuned our offering strategies to align with the evolving market dynamics and effectively maintained the overall stability of our business operations while improving profitability. We believe that by sharpening our focus and capitalizing on the platform's core competitive edge, we can effectively foster a vibrant, healthy, diverse, game centric content ecosystems while continuing to uphold regulatory compliance. We remain unwavering in our commitment to the company's long term sustainable growth.
With that, I will now turn the call over to our Vice President of Finance, Mr. Hao Cao, to go through the details of our financial performance in the quarter.

Hao Cao

Thank you, Lingling. Hello, everyone. Looking back on 2023, despite ongoing macro headwinds, we diversified our revenue streams with advertising and other revenues contributing 13.2% of our total revenue. Meanwhile, we successfully executed our cost-effective strategy, adjusting our live streaming business to prioritize healthy margins, and importantly, managing our costs and expenses to enhance our earnings. For the full year of 2023, we achieved an adjusted net income of RMB154 million.
Let's now look at our financial performance for the fourth quarter in more detail. Total net revenues in the first quarter of 2023 decreased by 22.9% year-over-year to RMB1.3 billion. Live streaming revenues were RMB1.02 billion, a decrease of 36.1% from RMB1.6 billion in the same period of 2022. The decrease was primarily due to soft macroeconomic conditions and our deliberate reduction in revenue-generating promotions during the quarter. These factors affected the spending awareness of some new and price-sensitive paying users.
Additionally, our strategic decrease in marketing spending led to a smaller user base, resulting in a year-over-year decrease in total paying users. In response to a soft consumer sentiment, we continue to offer lower-priced revenue products to maintain spending habits of our mid to long power paying users, leading to a decrease in quarterly APU. Our quarterly APU was RMB278, about 4.9% from RMB293 in the same period last year.
Advertising and other revenues were RMB275.2 million, a significant increase of 226.5% from RMB84.3 million in the same period of 2022. The year-over-year increase was primarily driven by other revenues generated through our new innovative businesses such as again, specific membership service and a voice paid -- voice based, social networking service. Cost of revenues in the fourth quarter of 2023 was RMB1.17 billion, a decrease of 21.8%, compared with RMB1.5 billion in the same period of 2022.
Revenue-sharing fees and content costs decreased by 30.3% to RMB0.89 billion from RMB1.27 billion in the same period of 2022. The decrease was primarily driven by two factors. First, the decrease in revenue-sharing fees, which was largely in line with decreased livestreaming revenues. Second, the decrease in content costs, which was primarily attributable to improved cost management in our self-produced content and streamer payments.
However, this decrease was partially offset by higher copyright costs related to the LOL World Championship Tournaments. Bandwidth cost in the fourth quarter of 2023 decreased by 27.4%, RMB105.5 million from 138.4 million in the same period of 2022. The decline was primarily due to a year-over-year decrease in peak bandwidth usage.
Gross profit in the fourth quarter of 2023 was RMB126.2 million compared with RMB186.1 million in the same period of 2022. The decline in gross profit was primarily attributable to decreased live streaming revenues. Gross margin in the fourth quarter of 2023 was 9.7% compared with 11.1% in the same period of 2022. The decrease in gross margin was mainly attributable to the increase in other costs and copyright costs as a percentage of revenues, which was partially offset by the decreased percentage of revenues attributed to revenue-sharing fees.
Sales and marketing expenses in the fourth quarter of 2023 were RMB84 million, a significant decrease of 32.2% from RMB123.9 million in the same period of 2022. This was mainly attributable to a decrease in marketing expenses for user acquisition as well as a decline in staff related expenses. Research and development expenses in the fourth quarter of 2023 were RMB59.1 million, representing a 26.7% decrease from RMB80.6 million in the same period of 2022. This decrease was primarily due to a decrease in staff related expenses.
General and administrative expenses in the fourth quarter of 2023 were RMB80 million, an increase of 45% from RMB55.2 million in the same period of 2022. The increase was due to higher salary expenses associated with management position adjustments, increased expenses related to our organizational streamlining initiatives, as well as an increase in the provisions for assets. Loss from operations was RMB120.4 million in the fourth quarter of 2023, compared with RMB56 million in the same period of 2022.
Adjusted operating loss, which adds back impairment loss of goodwill and intangible assets was RMB86.4 million in the fourth quarter of 2023 compared with RMB56 million for the same period of 2022. Net loss in the fourth quarter of 2023 was RMB62.2 million compared with net income of RMB41.8 million in the same period of 2022. Adjusted net loss, which excludes share-based compensation expense, the share of income or loss in equity method investments gain on disposal of investment, impairment loss of investments and impairment loss of goodwill and intangible assets was RMB5 million in the fourth quarter of 2023 compared with RMB4.3 million in the same period of 2022.
For the fourth quarter of 2023, basic and diluted net loss per ADS were both RMB0.19, while adjusted basic and diluted net loss per ADS were both RMB0.02. As of December 31, 2023, the company had cash and cash equivalents, restricted cash, restricted cash in other noncurrent assets and short-term and long-term deposits of RMB6.86 billion compared with RMB6.81 billion as of December 31, 2022.
Looking forward, we are committed to enhancing revenue diversification, optimizing operating efficiencies, and prudently managing costs and expenses. By remaining agile in our responses to market dynamics and diligently executing our core growth strategy, we are confident we can overcome the short-term challenges and foster the long-term healthy development of our platform while also delivering value to our shareholders.
This concludes our prepared remarks for today. Operator, we are now ready to take questions.

Question and Answer Session

Operator

We will now begin the question-and-answer session. (Operator Instructions)
Brian Gong, Citigroup.

Brian Gong

(spoken in foreign language)
I'll translate it myself. Thanks, management, for taking my question. With more games now can be [lapper] across the -- on DouYu's platform, how should we see the stability of our streamers and how should we see the future trend? Thank you.

Thank you for your question. So overall, our streamers have remained relatively stable. We have exclusive cooperation agreements with our platform's top-tier streamers, securing stability throughout relevant contract terms. For core streamers whose agreements are about expire, we've developing market condition in mind. We actively engaged in renewal discussions with them in advance. We comprehensively assess contract cost and operating efficiencies and selectively negotiate and renew contracts. Over the years, DouYu's game centric content ecosystem has foster our wide array of influential streamers. What I need to highlight here is for some of those have emerges breakup streamers began their live streaming journey as gaming streamers on DouYu.
Their achievements underscore DouYu's prowess in nurturing and supporting streamers. Building upon our years of experience in gaming content operations, we have developed a sophisticated and effective mechanism for identifying and competing gaming streamers. Firstly, our platform offers streamers a multitude of content production options based on our commitment to content innovation and diversity. Secondly, our data analyzes towards empower streamers with better insights into user needs and market dynamics, enabling them to fine-tune their live streaming strategies, enhance quality, and boost efficiency.
Unlike short video platforms, we provide our streamers not merely algorithm-based data insights, but also with customized resources and content support based on each streamers' unique characteristics. This approach grants streamers, ample time for development well in point and to grow. We are intensifying our focus on refining operations on customizing our services and support to streamers across different tiers. To build on the existing influenced of top-tier streamers, we continued to reinforce their brand presents an impact by enhancing streamer IP to high-quality content and strategic operations, channeling and driving traffic, both within and beyond our platform.
With mid-tier streamers, we mainly focus on increasing their visibility by inviting them to participate in our self-produced events and programs. Additionally, some of our original e-sports player streamers have gained significant recognition and user claims through our core streamed live commentary programs during the broadcast of official tournaments. With our platform support, many has rapidly as needed to the top-tier.
For mid to long-term streamers, our priority is to provide them with solid fundamentals that support their continued presence and space for growth. Over the past year, we have initiated incentive programs in various gaming segments, encouraging up-and-coming streamers to go live and actively engage with the audience so that they can secure relatively stable incomes. During our insights from the ongoing data analyses, we also enable mid to long-term streamers with more timely and customized content support.
Apart from refined content operations, we will also offer more commercialization avenues for streamers through deeper cooperation with game developers. These will include game promotion [in itself] among other revenue generating opportunities across various game genres.
Our endeavors will increase streamer income, sentimenting and elevating DouYu's value as a vibrant, gaming centric content ecosystem. Top-tier streamers represent invaluable assets within the industry. As the live streaming sector matures, there's always competition over streamers resources within legal compliance. Through DouYu's decade-long journey, we have continuously navigated this competitive landscape for high-quality streamers. Like I said, our advantages, such as exclusive contracts and streamer nurturing programs are the cornerstone of our ongoing success within the competitive streamer market.

Lingling Kong

Thank you. Next question, please.

Operator

Excuse me for the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English.
Lei Zhang, Bank of America Merrill Lynch.

Lei Zhang

(spoken in foreign language)
Thanks, management, for taking my question. My question is in regard to your 2024 outlook, can you give us more color on your strategy and if it makes sense, are you concerned for? Thank you.

Thank you for your question. As we mentioned in our prepared remarks, our 2024 plan and focus will revolve around the covenant is three core trends, streamer, content, and the cooperation with game developers. Let me walk you through the branch one by one. In terms of a streamer results, our approach includes the three key initiatives. Firstly, we will concentrate on our core streamer resources by enhancing streamer IP and fortifying IP operations. By managing and promoting streamer account, both across and beyond our platform, we aim to bolster streamer appeal and drive increased traffic building our platform.
Secondly, we will prioritize fostering gaming streamers and recruiting more e-sports professional players. Further, we will diversify our streamers and monetization avenues through cooperation with game developers. In terms of our content ecosystem, our goal is to elevate content ROI, while affording premium quality. We strive to balance of all content cost by optimizing the number of official e-sports tournaments and self-produced gaming events. Additionally, we are delving into direct commercialization prospects for gaming event content such as resource sharing and game product sales to improve the ROI of our gaming content.
Our advancements in both streamer and content are closely tied to our cooperation with game developers. We have now centralized our resources and planning effort shifting away from our past approach where each business unit independently provided a collaborative proposals. By fully understanding our users' content and the gaming needs, we can pursue more in-depth collaborations with game developers.
Additionally, we are tailoring game promotion, operations, and commercialization strategies for game developers based on each game's specific development stage. To facilitate more effective execution of our plans and amplify the scenery of our core strength, we began an organizational restructuring at the outset of 2024, particularly, within business units related to our content ecosystem. We used to structure our content ecosystem business units around the individual gaming projects, with 15 teams under each business unit, mandatory streamer, operations, events and activities, and game developer collaboration.
Our restructuring has enabled us to shift away from game-based operations and consolidate fragmented result associated with gaming segments. Our internal communication channel are now more streamlined, allowing us to amplify our platform as a collective strength. In short, our goal this year are to enhance compliance while improving content quality and user experience. We are committed to diversifying revenue streamers and continuously optimizing cost and expense. In doing so we can stabilize and promote long-term healthy platform growth amidst a continually evolving market dynamic. Thank you.

Lingling Kong

Excuse me, Ms. Zhang, are you don with your question?

Yes, next question, please.

Lei Zhang

Yeah.

Operator

Raphael Chen, BOCI Research.

Raphael Chen

(spoken in foreign language)
Thank you management for taking my question. I'm just wondering how does management team evaluates the impact of some top tier Tencent games such as Honor of Kings and League of Legends being granted to stream outgoing platform. Thank you.

Thank you, Raphael. So the user base of China's Internet and gaming sector is near situation. In response, starting last year, Internet platforms started pivoting away from traditional traffic acquisition methods, instead, they have been prioritizing core business operations and competitive strengths, improving operating efficiencies and foster cross-platform collaborations. So cross-platform content sharing is emerging as a strategic trend. We have actively embraced the trend of open content. We have focused on our core strengths to fortify business fundamentals, also diversified our business scope and models, being mindful of competition risks while seeking diverse opportunities, we have been actively innovating our content offerings and fostering cross-platform collaborations.
In addition to producing differentiated and appealing content integrating our streamers unique characteristics, we've also explored cooperation avenues with other platforms to expand our content ecosystem, launching joint promotions and collaborative initiatives powered by the premium content features on our platform. For example, we have been progressively highlighting on partnerships with other platforms based on each party's top-tier exclusive streamer resources. We've been working on complementary content synergies, offering e-sport live streaming users more premium content and more convenient viewing options.
Additionally, in the second half of 2023, we started highlighting content promotions on retail channels with selected streamers. These enables streamers to scenic their live streaming content on retail channels to improve their content's visibility. Given the vast video user base of short video platform, we might encounter certain challenges in the short term, particularly potential downward pressure in MAUs this year. We have proactively addressed these risks by leveraging our strengths.
As part of our primitive measures, we deepened our operation around the gaming needs of our core users, including consistently rolling out high quality content and operational activities and updating on product features to fulfill diverse user needs. According to our data analyses so far, despite MAU declines, our platform's core user behavior metrics remain relatively stable.
Moreover, leveraging insights from our prior commercial collaborations, our marketing campaign centered around game ops including limited time styles during livestreaming sessions and regular game membership services that not only contribute to revenue diversification, but also foster new user acquisition while deepening existing user engagement. Moving forward, we will continuously explore more operational models to solidify our core user base and to pursue opportunities to propel growth across our platform. Thank you.

Lingling Kong

Operator, next question, please.

Operator

Derek Fei, Morgan Stanley.

Derek Fei

(spoken in foreign language)
Thank you, management. We noticed that the company has made significant progress in the known live streaming revenue in 2023, and you just mentioned earlier that diversifying revenue is one of the key focus for 2024. Could you please share more details about the plans and the goals for the upcoming year. Thanks.

Thank you, Derek. In 2023, advertising and other revenues surged by 135% year over year with its revenue contribution increasing from 4.4% in 2022 to 13.2%. This remarkable growth was driven by revenues from our new revenue-generating models. Capitalizing on strengths in gaming content operations, we expanded it into two. We have been exploring diverse avenues for commercialization beyond the traditional virtual gifting model. The robust growth of gaming membership business on a set of smaller innovative initiatives such as our voice-based social networking service contributed to other revenues in 2023.
In 2024, we plan to dive deeper into commercialization directly related to games. Given that the majority of our platform's core users of gamers, there's a clear demand for game prompts and new games, which closely align with our performance gaming content. Firstly, we will bolster and broaden the scope of gaming membership business, aiming to expand this service to more game genres. We plan to unveil new revenue-generating products and marketing strategies tailored to distinctive characteristics and player needs.
Secondly, we will ramp up our focus on performance-based game promotions. We intend to pivot away from streamers sponsored product placements and gradually transition to performance-based promotions such as cost per sale model. Streamers will have the flexibility to select new games for promotion based on their expertise and audience preferences. This CPS model has been operational for some time now, yielding promising results with conversion rate surpassing market average.
Furthermore, our other smaller innovative businesses have shown promising momentum and are now making revenue contributions. While these ventures currently operate on modest scale, we will keep you informed of their progress and expand. Overall, we anticipate advertising and other revenues will grow year over year in 2024, with their overall revenue share exceeding 20%. Given the impact of macroeconomic mass factors and internal operational adjustments, our traditional live-streaming business, we expect live streaming revenues to experience downward pressure in 2024 as the overall revenue share from live-streaming remains significant.
The rapid growth of our innovative businesses may have comparatively limited effort -- effect on the company's overall revenue scale. Despite potential short-term growth pressures as we fine-tune our core business, the company's financial remains solid and we continue to pursue breakthroughs in our innovative businesses. For example, in October 2023, we joined hands with [Taobao] and game developers to launch the game Shopping Bonanza on DouYu's official live streaming channels on the Taobao platform as well as live streaming sessions on DouYu's platform, selling game products and gaming merchandise from popular mobile games like Genshin Impact, League of Legends, Dota 2, and CrossFire.
Gamers has showed considerable demand for those offerings. The result of this campaign proved that streamers have a substantial influence on gaming commercialization on building vast potential opportunities. Moving forward, we will delve deeper into additional revenue generating avenues within the gaming content value chain. Thank you. Next question, please.

Operator

Thomas Chong, Jefferies.

(spoken in foreign language)
I'll translate for myself. So I have two questions. My first question is, so we saw the year-over-year and quarter-over-quarter increase of the G&A expenses. So could we share the reason behind and how the management see the trend of operating expenses and the profitability in 2024? And my second question is about share buyback program. So we announced the share repurchase program and we will share our strategy of share buybacks, and do we consider increased amount of buybacks? Thanks

Hao Cao

Thank you. I will answer the first question. There are two reasons for the year-over-year and sequential increase in operating expenses in the fourth quarter. First, and onset of 2024, we announced an organizational restructuring that will allow us to better respond to market dynamics and continually optimize the company's operating efficiency. As part of our staff were aligned to managerial actions, a portion of their salaries were allocated to the initiative expenses in the fourth quarter without an increase in employee salaries under administrative expenses. We also incurred some one-time personnel costs as part of our ongoing workforce optimization efforts. This is for a part of our preliminary organizational structure adjustments, and we anticipate further workforce adjustments in the first quarter of 1024.
Second, we made provisions for bad debt of doubtful account receivables. The combination of these one-time expenses caused part of the increase in operating expenses for the fourth quarter. And our goal of long-term sustainable growth throughout 2023, we adjusted our revenue and marketing strategies while continuing to make ROI driven decisions and consistently optimizing our cost structure.
These coordinated efforts resulted in a 28.7% year-over-year decrease in operating expenses for the full year of 2023. Importantly, we have successfully transformed losses into gains at the adjusted net profit level. Heading into 2024, our focus remains on enhancing our diversified commercialization capabilities across the platform while maintaining stringent control of our operating expenses. We are dedicated to upholding the company's financial stability in order to navigate complex and evolving macroeconomic dynamics.

Let me answer your second question around by the buyback. We have been overcoming challenges arising from a blend of macroeconomic conditions and the operational aspects. The company's Board of Directors and the Interim Management Committee are fully committed to addressing these challenges head-on. As part of our strategic initiatives, we announced our share repurchase program on December 28, 2023, on which we plan to repurchase up to USD20 million of the company's ordinary shares through ABS purchases.
This initiative highlights our confidence in the value of the company as well as our commitment to enhancing shareholder returns. We are currently in the initial phase of implementing our share repurchase program. Future adjustments to the program may be based on the company's strategic prioritize and ongoing review of market conditions.
Beyond the returns, the foundation of enhancing shareholder value lies in the company's fundamental [strengths] to operations. We have proven our business model is generally [intertwined] and I strongly believe in our company's long-term growth potential. Management's primary focus remains on executing our business strategies, identifying opportunities amidst the challenges and propelling the company towards long-term sustainable growth. Throughout this journey, we will continue to shore up our fundamentals, providing regular updates on our business operations and the share repurchase program. Thank you. Operator, please.

Operator

Thank you. That's all the time we have for questions. I will now turn the call back over to management for closing remarks.

Lingling Kong

On behalf of our Interim Management Committee, we thank you for joining our call. We look forward to speaking with everyone next quarter.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.