March 30, 2023
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Station B, whose losses have narrowed, has reached an inflection point?

Yesterday, Station B released its financial report for the third quarter of this year. In this year’s second-quarter financial report, Station B exposed some problems, but in the third-quarter financial report, the market has seen signs that Station B has bottomed out.

 

In the third quarter financial report of Station B, the narrowing of net loss and the increase of gross profit margin were particularly impressive. The net loss of Station B in the third quarter narrowed by 36% year-on-year. up to 18.2%. While users continued to grow at a high quality, marketing and sales expenses shrank year-on-year in the two quarters, Q3 shrank by 25%, and the proportion of total revenue dropped from 31% in the same period last year to 21%. The final non-GAAP operating loss was 1.6 billion. Loss ratio improved to 27.6%, better than expected.

 

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In terms of revenue, Station B’s revenue in the third quarter reached 5.79 billion yuan, of which, value-added service business and advertising business revenue both increased by 16% year-on-year.

 

After the release of the third-quarter financial report, the stock price of Bilibili rose by more than 20%. As of press time, the stock price was $15.4.

 

Judging from the current business outlook, Bilibili, which is a live broadcast e-commerce platform mixed with Double Eleven, has brought a fresh atmosphere to the entire industry. In terms of game live broadcast, it will continue to focus on the integration of content and live broadcast, and live broadcast S games for three consecutive years ( “League of Legends” World Championship).

 

In addition, Chen Rui, the chairman and CEO of Station B, personally took charge of the game. In the third-quarter financial report conference call, he even talked about making efforts to develop self-developed games. Better do it.”

 

Seeing the inflection point of station B, the next action is even more worth looking forward to.

 

Subheading 1: Market Fees Decline, User Growth Maintains High

 

The financial report for the third quarter of 2022 shows that in the case of a 25% year-on-year decrease in marketing and sales expenses, Station B has still achieved good results in terms of user growth. Internet companies in the external environment have generally hit the ceiling of user growth, and the internal environment is difficult to realize and make profits. Under the background of internal and external difficulties, the user scale of station B still maintains high growth.

 

If the number of users and stickiness can continue to grow, there will be a basis for continuous realization of Bilibili. The financial report for the third quarter shows that the net increase of Bilibili users was 26.9 million, the number of daily active users reached 90.3 million, and the average number of monthly active users reached 333 million, both of which increased by 25% year-on-year, slightly exceeding expectations.

 

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From the perspective of user stickiness indicators, DAU/MAU remained at 27.2%, and the average daily user time was 96 minutes, a record high, an increase of 8 minutes over the same period last year. The total user time in this quarter increased by 37% year-on-year. In addition, as of the end of the third quarter, the number of official members who passed the 100 community exams increased by 37% year-on-year to 183 million, and the 12-month retention rate of official members was stable at more than 80%.

 

The continuous growth of user scale and stickiness comes from the unique tonality and rich dimensions of commercial exploration on the content platform of Station B. In terms of video form, Bilibili keeps up with the pace of short videos and seeks to realize them. In 2021, the Story-Mode short video function data that station B will start to test is good, and it has achieved mature commercialization. In this quarter, the number of vertical screen video playbacks increased by 473% year-on-year, the total usage time of users increased by 37% year-on-year, and the average monthly interaction reached 14.4 billion times, a year-on-year increase of 41%.

 

Although in the past two years, the user scale of station B has maintained a rapid growth of about 30% per quarter, while breaking the circle, it is also experiencing doubts-whether the small broken station will “degenerate”. However, it can be seen from the actual user data that the moat of the content ecology of station B is still strong, and the diversified content atmosphere does not make station B lose the platform tonality, and it has become the reason for attracting users and retaining them.

 

High-quality PUGV (Professional User Generated Video) content and a large number of high-quality creators are the basic advantages of Bilibili’s community stickiness and commercial value. Observing the changes in the content categories of PUGV at station B, it can be found that in addition to the past “traditional arts” such as games, animation, and music, the current emerging categories such as automobiles, home furnishing, decoration, and mother and baby are becoming more and more abundant.

 

Behind these changes is the growth logic of consumption power of Bilibili users. Bilibili has been established for 13 years, and the early young users have entered a new stage of life as they grow older, and their spending power has become stronger. Once I thought of young people, I would think of station B, and it is the same now, but the difference is that these young people have grown up and become richer.

 

The logic of “young users have grown up” that Station B has been telling is also confirmed in the transcript. For example, in the past year, the marketing of industries such as automobiles and home furnishing at station B has increased significantly. The number of searches for automobile brands on Bilibili exceeded 120 million times, and the number of automobile videos played exceeded 14.5 billion, a year-on-year increase of 116%. Chen Rui mentioned that in the third quarter, the year-on-year growth rate of car advertising exceeded 80%.

 

In the third quarter, the average monthly active UP hosts on station B reached 3.8 million, a year-on-year increase of 40%, and the average monthly submissions reached 15.6 million, a year-on-year increase of 54%. Station B continues to provide rich monetization channels for UP owners, so that UP owners can not only efficiently create their favorite content, but also obtain commercial returns. In the third quarter, more than 1.25 million UP owners obtained income from Bilibili through various channels, a year-on-year increase of 74%.

 

In terms of OGV (Occupationally Generated Video, video created by professional institutions), as a video platform, it does not have an advantage in the competition with Aiyouteng. Station B is still doing its best to maintain the moat on Guochuang Animation. At the 2022-2023 Guochuang animation work conference held in October, Station B announced that the “Three-Body Problem” animation will be officially scheduled for December, and we can look forward to the performance of this national-level IP.

 

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Subheading 2: “Xiaopozhan” mixed with Double Eleven

 

After Bilibili started the road to commercialization, everything was focused on making money, and the commercialization results after the third quarter’s efforts were remarkable.

 

Under the macro environment, the advertising business of Station B is under pressure, but it has recovered significantly, and the overall performance of the advertising business is better than that of the industry. The financial report shows that in the third quarter, Bilibili’s advertising business revenue increased by 16% year-on-year to 1.35 billion yuan. The top five advertiser industries are games, digital home appliances, beauty and skin care, automobiles, and food and beverage. Story-Mode vertical screen video has brought new growth in advertising revenue. In addition, in the third quarter, the number of UP owners who settled in Huahuo increased by 121% year-on-year, and the number of UP owners who obtained business orders increased by 96% year-on-year.

 

In terms of advertising, Bilibili’s promise not to add pre-roll ads has been discussed. Li Ni, vice chairman and COO of Bilibili, also responded at the financial report meeting, saying that Bilibili will not easily try pre-roll ads. She mentioned that the market’s pre-roll advertising revenue only accounts for 3% to 5%, and the proportion is shrinking rapidly, and the unit price is getting lower and lower. “The content of station B is concentrated in 2 to 5 minutes, and the pre-roll revenue will be relatively small, but It will also extremely damage the user experience, and Bilibili will not easily try this kind of traditional advertising form and model that is not worth the candle.”

 

In terms of traditional video business orders, station B has always had a commercial atmosphere of “Let Ta Cha”. There are arguments that all commercialization itself will damage the tonality of the content community, but the facts prove that this is not entirely the case. Some B station UP owners “Qiafan” are very popular. This is related to the characteristics of PUGV content itself. The production level of the UP master and the closeness to the audience will make “Qiafan” more reasonable, and even become good content itself.

 

In addition to the model of creative business list, which is not only a feature, but also extremely dependent on UP owners, effect advertisements are being favored by station B.

 

In the recent Double Eleven melee, people’s attention has been focused on Tmall, JD.com, Pinduoduo, plus Douyin and Kuaishou. Unexpectedly, Bilibili has also “messed in”. During Double Eleven in 2022, the commercialization revenue of Bilibili’s e-commerce industry will increase by more than 100% year-on-year. Li Ni mentioned in the conference call that on the day of “Double Eleven”, the advertising revenue of Station B increased by 47% year-on-year, and the revenue of effect-based advertising also increased by more than 80% year-on-year.

 

In the battle between Double Eleven and e-commerce, Bilibili plays more of the role of “carrying goods”. Li Ni is more willing to understand the definition of “carrying goods” as a form of expression of “consumption and transaction”. In the last two quarters, together with Taobao, Tmall, JD.com, Pinduoduo, and brand advertisers, we have tried to explore “grass planting consumption-transaction transformation” at Station B, including videos, live broadcast content and Bilibili. The combination of unique advertising flow on the site.”

 

Bringing goods requires direct cooperation with the head anchor, and Station B directly cooperated with Li Jiaqi to start a variety show. On October 9th, the program “All Girls’ Offer 2” in which Li Jiaqi participated was exclusively broadcast on Bilibili. This program brings the behind-the-scenes price negotiations to the foreground, aiming at the beauty needs of female users at station B. The 8 episodes of the program received a total of 26 million hits. In the past, watching variety shows was just watching variety shows, and live streaming was just for bringing goods, but in this variety show, users of station B directly regard bringing goods as content, and the content is directly advertising, which is the dream effect of many commercialization.

 

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On the whole, the commercialization of station B is still in the penetration stage, and the income scale is not large, but the imagination space is not small.

 

Subheading 3: Games and live streaming, another success?

 

From being called “a fake video platform, a real game company” because of the game’s launch, to some outside voices questioning the “de-gamification” of Station B, and now Chen Rui personally leads the game, releasing a signal of importance, breaking doubts, and the importance of games to Station B has always had complicated feelings. Chen Rui also responded positively at the earnings conference call this time, “I think the development of our game business is not as good as I expected.”

 

However, the financial report shows that the performance of the game sector in the third quarter was not very bad. In the third quarter, the game revenue of station B was 1.47 billion yuan, a year-on-year increase of 5.7%, reaching 1.47 billion yuan, exceeding the industry performance in the same period.

 

Station B’s next game strategy is still “self-developed boutique, global distribution”. In terms of self-developed games, in the third quarter, Bilibili did not launch self-developed games. Chen Rui mentioned, “In the past two years, our self-developed games have spread too much. It must have been a little bit, greedy, but to no avail.” Where the self-developed games under the boutique strategy will go, it is very worth looking forward to.

 

With the policy recovery and downturn, the game industry is expected to bottom out next year, and the income from game agency at Station B is also expected to increase simultaneously. Station B mentioned that currently two games have obtained version numbers and are planned to be launched in China, and several games are in the final approval stage. In addition, Bilibili expects to release a number of self-developed new ACG-themed games at home and abroad next year.

 

As Chen Rui mentioned, it is logical for station B to make games because there are many game-related content in the community, including live broadcast of game events.

 

The 2022 “League of Legends” Global Finals (S12 for short), which just ended on November 6, was broadcast live at Station B. The popularity of the League of Legends live broadcast room at Station B exceeded 300 million, and 100 million people watched League of Legends-related videos at Station B. content.

 

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In the eyes of Chen Rui, the game live broadcast was still one of the “biggest misses of Bilibili”, “Bilibili is the largest game video platform in China, why didn’t it become the largest game live broadcast platform in China?” It’s the giant ship ticket for the live broadcast of the game.

 

The integration of content and live broadcasting has always been emphasized by Station B. The three-year live broadcast of S games at Station B is also an example of the combination of live broadcasting and the content ecology of Station B. In addition to League of Legends, live broadcasts of DOTA/CS GO/Overwatch and other events are also popular at Station B. The emergence of a large number of game content has made many video UP hosts become live broadcast anchors. This is what Chen Rui said, “Let UP hosts become anchors, and let anchors become UP hosts.” He mentioned that in the third quarter, the number of people who are both UP hosts and anchors increased by 73% year-on-year.

 

Thanks to the steady growth of the live broadcast business, the financial report shows that the value-added business revenue in the third quarter reached 2.21 billion yuan, a year-on-year increase of 16%. The average number of monthly active anchors at station B increased by 67% year-on-year, and the average monthly paid users of the live broadcast business increased by 79% year-on-year.

 

For station B, the pressure to achieve breakeven by 2024 still has to be faced, but the worst time has passed. Under the current blurred environment and the inflection point looming data, what needs to be done most for station B is to use the advantages of the community to connect live broadcast, content and e-commerce, and use multiple commercial models to form new growth points .

 

At the same time, Bilibili still needs to focus on improving the commercialization infrastructure, and combine content advantages with commercialization strategies. This is what we see Bilibili is doing. Once this is added, there is still a lot of room for imagination in the future commercialization prospects of Station B.

 

Station B, which can make people feel the vitality, is the most anticipated.

 

Ewen Eagle

I am the founder of Urbantechstory, a Technology based blog. where you find all kinds of trending technology, gaming news, and much more.

View all posts by Ewen Eagle →

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