Understanding Bilibili’s Ascent

Bilibili, an emerging content platform in China with a strong games background, just announced its Q4 2020 financial results, and the company’s progress remains impressive:

  • Full year net revenue was $1.8 billion (+91% year-over-year)
  • MAUs topped 200 million (+55%)
  • DAUs hit 54 million (+42%)
  • Monthly paying users hit 17.9 million (+102%)

Obviously something interesting is going on at this company, but let’s take a step back for the uninitiated. What exactly is Bilibili?

Bilibili is the defacto long-form user-generated content (UGC) video platform in China with no significant second place in sight. In other words, it’s on its way to become something akin to the YouTube of China. Tencent Video and iQiyi dominate premium content (think Netflix), and Bytedance is the king of short-form UGC videos with TikTok. Bilibili’s differentiator since inception in 2009 was its focus on the ACG (Anime, Comics & Games) community and its user experience (no ads). Bilibili only started seriously monetizing in 2014 when it began publishing mobile games catering to its ACG community. The company’s big break, however, came in 2016 when they licensed FGO (Fate/Grand Order) from Type-Moon. In 2017, they published Azur Lane from Yostar, and both games combined contributed 70% of Bilibili’s total revenue that year.

Fast forward to today, and Bilibili has built an extremely sticky and engaged young user base. The grand strategy since 2018 was to expand out of its core ACG niche into the mass market (like if Crunchy Roll expanded into Youtube). Notably, 86% of their 202 million users are below the age of 35.

Over the past year investors have taken increasing notice of the company’s success, causing Bilibili’s market cap to leap 5-6x from last February — now $43.5 billion. The company’s Q4 revenue of RMB3.84 billion (~$640 million) can be split into 4 categories: Games (29% of revenue), Value Added Services (33% —premium membership, live broadcasting, etc.), Advertising (19%), and E-Commerce/Other (19%). Bilibili’s revenue used to rely heavily on gaming (80% of 2017 revenue came from games), so this impressive diversification highlights the massive growth of its video content business.

Bilibili’s user base gives the company a respectable advantage in China’s gaming ecosystem, and they are the only non-Tencent company in China (and probably in the world) that has successfully married gaming, video, and social in a meaningful way. This advantage was why Bilibili was a core element of Genshin Impact’s go-to-market strategy in China, part of why Bilibili signed the rights for Fall Guys Mobile over Tencent and Netease, and the company even has paid up for exclusive esports broadcast rights. Bilibili now has the ability to target popular IPs, directly distribute games to its 200+ million active users, and grow in many new ways. The company’s progress in recent years is truly impressive, and they still have plenty of room to expand further. It’s a fun company to watch.