Bilibili: A look at the 2D video community based on financial report data

The two-dimensional video community Bilibili (commonly known as Station B) has finally submitted its prospectus, and we are finally able to get a glimpse of the mysterious face of this two-dimensional company from the data.

When people talk about Bilibili, they think of comics, animations and other two-dimensional websites, although the content of Bilibili has far exceeded the scope of two-dimensional animations. However, thanks to the construction of the community, the atmosphere of the two-dimensional community of Bilibili is still very strong. Bilibili positions itself as a cultural community for young people, and its mission is to enrich the daily lives of young Chinese users.

Users: 72 million monthly active users

In the fourth quarter of 2017, Bilibili had 72 million monthly active users, of which more than 80% were born after 1990. Judging from the data, it is not surprising that Bilibili positions itself as a lifestyle platform for young users.

From the content point of view, the anime elements that can be found everywhere on Bilibili and the barrage culture that actively expresses oneself undoubtedly well illustrate the characteristics of the two-dimensional world and the younger generation.

Content: PUG is the mainstream, and the content is comprehensive

When talking about B站, most people think of animation and other ACG-related content, but the content types of B站 are actually very rich, including PUG videos; copyrighted videos; live broadcasts; short videos, graphic blogs; and mobile games. However, PUG content is still the most influential.

The PUG content on Bilibili continues to maintain strong growth momentum. In 2017, Bilibili had an average of 204,000 active content creators per month, double the number of last year. The average number of videos submitted per month exceeded 836,000, 2.3 times that of last year, of which 68.6% were original PUG content.

In 4Q17, the number of PUG content submitted to the platform continued to rise, reaching an average of 31,400 per day, covering animation, games, music, fashion, lifestyle and technology, and documentaries, compared to only 14,300 in the same period last year. PUG videos are well received by users for their originality and creativity, as well as their inherent sharing and interactive features. In 2017, the number of PUG videos played accounted for 85.5% of all videos on Bilibili, up from 74.5% in the same period last year. By the end of 2017, the number of content creators with more than 10,000 followers doubled from the previous year.

Community: Strong community culture

Bilibili has a good community culture, which is largely due to the high entry threshold for formal members. Users who want to upgrade to formal members need to pass the test of Bilibili. These questions include product functions, community norms and professional knowledge in the field of the second dimension, thus avoiding the dilution of the strong second dimension culture of Bilibili and also benefiting from the screening of more creative user groups. As of the end of 2017, Bilibili had a total of 31.6 million formal members who passed the test.

Bilibili users have a high level of community interaction, such as posting bullet comments, commenting and sending messages, and giving virtual gifts to content creators. In 2017, an average of 15.2 million users had social interaction behaviors per month, generating 221.1 million interactions, while these two indicators were 8.4 million and 113.5 million in 2016, respectively. In the fourth quarter of 2017, 75% of official members participated in social interactions.

At the same time, Bilibili also has a content and community management team organized by users, which effectively promotes content review and governance of community violations.

User usage time and retention: average daily usage time is 76 minutes, and the retention rate in December exceeded 79%

In 2017, the average daily time spent by users on Bilibili’s mobile app was 76 minutes, up from 72 minutes last year. The user retention rate in December reached 79%, undoubtedly the highest in the industry.

Commercial realization: Games account for more than 80%

In 2017, the total revenue of Bilibili reached 2.468 billion yuan, a year-on-year increase of 372% over 2016. Most of Bilibili's revenue came from mobile games, which accounted for 2.058 billion yuan in 2017, a year-on-year increase of 501%, and the proportion of revenue increased from 65% last year to 83%.

In 2017, Bilibili had 8 exclusive games and 63 co-operated games. The games that contributed the most to revenue in 2017 were Fate/Grand Order and Azur Lane. Fate/Grand Order was introduced in September 2016 and attracted 4.5 million players within 30 days of its launch. It should be noted that in 2017, Bilibili's game revenue still relied on games introduced in 2016 such as Fate/Grand Order. The proportion of newly introduced games in 2017 was only 19%. The number of monthly players of Bilibili's mobile games was 9.1 million in 2017, compared to 3.1 million last year, a year-on-year increase of 194%.

The revenue of B station's live broadcast business mainly comes from virtual gifts from users, while the membership revenue mainly comes from membership subscriptions, paid content and virtual items on the video platform. In 2017, the revenue of live broadcast and membership was 176 million yuan, a year-on-year increase of 122%.

In 2017, advertising revenue was 159 million yuan, a year-on-year increase of 122%. With the introduction of performance-based information flow advertising services in December 2017, revenue is expected to increase further in 2018.

In 2017, the company had other income of RMB 74.62 million, mainly from sales on e-commerce platforms and offline activities.

In terms of paying users, in 4Q17, Bilibili had a total of 1.07 million paying users, of which 645,000 were mobile game paying users. Both figures declined, and the company explained that this was due to seasonal factors of students going to school.

Profitability: No profit in 2017, but losses narrowed

In 2017, Bilibili still did not realize profitability, but its losses were significantly narrowed compared to 2016. In 4Q17, Bilibili still lost 51.32 million yuan, which was worse than the summer peak season in the third quarter, but much better than last year.

The costs of Bilibili mainly come from revenue sharing, content costs, servers and bandwidth, etc. With the rapid growth of mobile games and live broadcasting, the revenue sharing ratio has exceeded the server and bandwidth costs, becoming the largest source of costs.

In terms of expenses, marketing expenses vary with the promotion of game projects, and R&D costs continue to grow with the needs of the company's development, but in the long run, the proportion of these expenses to revenue should decline to a certain extent.

With the mission of serving China's younger generation of users, the company believes that it has the following advantages: brand advantage among the younger generation of users; a still rapidly growing user base; a highly sticky user group with a high sense of belonging; a growing creative content base; a commercial content and monetization ecosystem; and a visionary and experienced management team.

After listing, the company will continue to implement the following strategies: enrich content supply; enhance the platform's user experience; strengthen technical facilities; and enhance monetization capabilities.