WalktheChat · Follow
Published in · 6 min read · Jun 16, 2019
China’s online video market seems to be dominated by 3 companies: Youku (owned by Alibaba), iQiyi (owned by Baidu) and QQ Video (owned by Tencent).
A third contender is however worth a look, from users and marketers alike: the hype and versatile platform Bilibili.
What is Bilibili?
The popular youth-oriented video streaming and sharing giant Bilibili is considered to be the platform most similar to Youtube. However, Bilibili’s defining features and unique community culture differentiate it from its western counterparts.
One such feature is “Danmu (弹幕)” or “bullet chat”: a form of video commentary used on online videos. Danmus are comments that appear directly on the video in real-time, sliding from right to left. In China, it was first adopted by Bilibili and AcFu. Nowadays it has become a common practice among mainstream video platforms such as iQiyi and Tencent Video. Danmus are beloved by Millennials and Gen-Zers. As the generation of the one-child policy grew up without siblings, young Chinese people enjoy watching videos with Danmus, which creates a stronger sense of sharing and belonging.
This community feeling helps the platform grow: in China, one out of every two young people is on Bilibili. Young people under 35 years old account for 86% of the platform’s 202 million Monthly Active Users. This audience, with its growing purchasing power, has been a key focus for brands in China.
Bilibili is also an engaged and sticky community. Users spend more than 80 min per day on the platform, generating 4.7 billion interactions per month.
Since its creation in 2009, Bilibili has grown from a purely ACG (Anime, Comics, Game) content platform to a pan-entertainment online video community with contents ranging from fashion, lifestyle, technology to gastronomy, knowledge sharing, etc.
The company’s new slogan “All the videos you love are on Bilibili” illustrates this desire of the company to cover all aspects of users’ life. Thus, it has become a not-to-miss platform for brands who want to build a deeper connection with young Chinese audiences.
A social-focused video platform
Bilibili is known for its video commenting feature, Danmu (弹幕, directly translated to bullet screen comment). Users can make a quick comment at a particular moment during the video. The comments will shoot from the side of the screen, covering the video content like bullets.
A popular video could receive thousands of Danmus. Imagine watching a movie while thousands of people are all commenting on the video at the same time. It could get hectic for some users.
Many of the comments can seem very repetitive as if users are seeking for more social confirmation. But sometimes Danmu can be interesting when users post good sarcastic comments.
Since Danmus are spontaneous, it’s a place viewers can socialize with other viewers. A good comment could even become popular Internet slang.
Bilibili’s growth
Bilibili has seen a strong growth of its revenue over the past year, from 0.8 to 1.4 billion RMB (a 58% YOY growth rate)
Although the company isn’t profitable, it has managed to reduce its net loss over the 2 last quarters to 195.6 million RMB.
Monthly Active Users (MAUs) are also growing at a steady pace of 31% YOY, reaching more than 100 million as of Q1 2019.
But the strongest metric for Bilibili is their growth of paying users. The number of paying users grew from 2.5 to 5.7 million between Q1 2018 and Q1 2019: a 132% increase YOY.
The cost of content for Bilibili was RMB 175.8 million in Q1 2019, making up 15% of the cost of revenue. This is the cost of purchasing licensed content from copyright owners and content distributors (and doesn’t include revenue sharing for user-generated content, which we will discuss later in this article).
For iQiyi, a mainstream video platform operated by Baidu, the cost of content was RMB 5.3 billion: 73% of the total cost of revenue. The reason is mostly that iQiyi, just like Netflix, is constantly investing in creating original shows. It has launched hit shows including Produce 101, Story of Yanxi Palace, Daomu Biji, U can u bibi.
Revenue sharing structure to encourage user-generated content
Bilibili is very different in terms of content focus. Unlike iQiyi which focuses on purchasing licenses and creating original content, Bilibili has a strong revenue sharing program to encourage users to upload their own content.
This makes Bilibili one of the highest paying platform for content creators in China. Revenue sharing costs Bilibili RMB 551.7 million in 2019 Q1, making up for 40% of revenue and 47% of the cost of revenue.
According to a blogger KatandSid, who published content on Bilibili, Toutiao, WeChat, Youtube, Weibo, and iQiyi. Based on the data of the last 3 years, here is the earning sharing on each platform for each 10k view-count:
- Youtube: ~ 280 RMB
- Bilibili: ~ 40 RMB
- Toutiao: ~ 25 RMB
- Weibo: 0 (does not have a revenue-sharing plan)
Although Bilibili provides strong incentive to content creators, it can hardly compare to Youtube. Platforms like Weibo do not even provide revenue sharing program. That’s why content creators have to rely on ads to generate revenue. This could ultimately affect quality of content and user experience.
How does Bilibili make money?
Bilibili makes money mostly from games it published and promotes through its platform. Mobile games make up for almost two thirds (64%) of Bilibili’s revenues.
There was however a clear shift in the revenue sources of Bilibili: e-commerce went up from 2% to 7% of revenue within one year, while mobile games went down from 79% to 64% of their revenues.
Risk
Like any other content platform, tightening content regulation could make it hard and harder for Bilibili’s content to be approved for distribution in China. This is especially true for content purchased from Japan.
In fact, the anime industry has been consolidating over the past 2 years. Bilibili’s largest competitor Acfun was acquired by Kuaishou for a valuation of RMB 1.04 billion ($162 million) in June 2018. It was valued at RMB1.85 billion at the end of 2016, almost double the amount of the final acquisition price.
Bilibili is trying to make up the content shortage by encouraging Chinese anime content. But as of today, the quality gap is still too large to attract significant viewership.
As content on Bilibili is becoming more mainstream, the platform is also facing direct competition from Tencent Video and iQiyi. But both competitors have a strong original content production capability that Bilibili still lacks.
Short-video platforms such as Douyin and Kuaishou are also eating up the market for user-generated content.
Conclusion
Bilibili stands out from the rest of video platforms due to it’s unique anime-focused content positioning and strong revenue sharing program.
It’s unlikely Bilibili could compete against Tencent, Baidu or Alibaba in the mainstream video content space. The BAT companies are dominating the online video space through QQ Video, iQiyi and Youku.
In order to maintain its competitiveness, Bilibili will have to innovate and put more focus on content generation, instead of relying on imported content from Japan. Its versatile positioning at the intersection of gaming, anime and e-commerce might help Bilibili stand out from the crowd.
