Video streamer Bilibili doubles advertising revenue with new forms of content, but user growth could strain its relationship with anime, comics and games fans
- Video streaming platform Bilibili has spent years trying to grow beyond its young user base to diversify revenue streams, and it paid off in the fourth quarter
- The company grew advertising revenue by 149 per cent, aided by new content like lifestyle videos, in a big departure from its niche beginnings
Years of aggressive moves by Bilibili to transform into a more mainstream video-streaming platform with diversified revenue streams are paying off, with advertising revenues more than doubling in the fourth quarter of 2020, which could be welcome news for investors ahead of the company’s second public offering in Hong Kong in the coming weeks.
The Shanghai-based company saw revenues rise 91 per cent to 3.8 billion yuan (US$588.3 million) in the fourth quarter, as advertising revenues saw the second-largest gain, jumping 149 per cent to 722 million yuan, the company reported on Tuesday. “E-commerce and others”, a section that includes content licensing, grew the most, rising 168 per cent to 740.8 million yuan.
Value-added services – which include premium subscriptions, live streaming and a comic book platform – grew 118 per cent to surpass mobile games as Bilibili’s biggest revenue generator, pulling in 1.2 billion yuan, 32 per cent of the total. Mobile games, which made up 44 per cent of revenue a year earlier, were down to 29.4 per cent of revenue in the fourth quarter. Overall mobile game revenue grew 30 per cent to 1.1 billion yuan.
Bilibili, or “B Station” as it is affectionately known to fans, has been pushing to expand beyond its original appeal to the niche anime, comics and games (ACG) subculture since it went public on the Nasdaq in 2018. While younger people from China’s Generation Z have traditionally made up the bulk of the platform’s users, efforts to move into new content areas and become something more akin to Google’s YouTube are proving fruitful.
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“When the platform has expanded with new content [in areas] such as beauty and lifestyle, it smoothed things out for its advertising business, as a broader range of brands will need a platform like Bilibili with a solid user base among the younger generation,” said Shawn Yang, the Shenzhen-based managing director of Blue Lotus Capital Advisors.
New revenue streams outside gaming, especially in advertising, will be a long-term trend for Bilibili, Yang added.
With the expectation that video will eventually become the primary form of content that people consume online, Bilibili has set aggressive targets for future growth. The company aims to double its monthly active users (MAUs) over three years, from 202 million in the fourth quarter to 400 million by the end of 2023, Bilibili CEO Chen Rui said in a conference call with analysts on Wednesday.
“That is actually quite challenging,” Yang said. “But since [Bilibili] dares to put it forward, I think the market is looking at it positively.”
In addition to its new MAU milestone, Bilibili’s monthly paying users doubled to 17.9 million. Along with subscribers, this includes users who spent money on any of Bilibili’s products, including games, comics and live streaming.
The company also has to juggle duelling allegiances as it seeks to appeal to new users while retaining the ones who made Bilibili big in the first place. This has already led to some headaches for the company.
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These challenges come as Bilibili is preparing to raise US$3 billion in a second listing in Hong Kong. That makes its efforts to offer new types of content even more important. Chen, the CEO, said explanatory content such as how-to videos was one of the platform’s fastest growing content segments last year.
“In the past, people might have the perception that Bilibili has all the content for the young generation, such as anime, games, music and entertainment. But in 2020, you will notice that there is a lot of content emerging for all ages, appealing to older age groups,” Chen said in the conference call.
Chen added that users born between 1985 and 2009, or Generation Z+ as Bilibili calls them, still make up the platform’s core user base, with 86 per cent of users below the age of 35.
As the company continues to expand, pushing into new content areas that it hopes will appeal to different age groups, there are questions about whether it can maintain the feeling of being home to a tight-knit community that has long been one of its main appeals.
Blue Lotus’ Yang said that going forward, Bilibili’s marketing and operational skills will be put to the test.
“There will be trade-offs to make [for niche and mainstream users] before it reaches 400 million MAUs,” Yang said.
