Editor’s note: This article is from the micro-channel public number “twelve hundred words” (ID: word1200), Author: keykey7,36 krypton release authorized.

Chen Rui, chairman and CEO of Bilibili (Station B), predicted six months ago that the number of monthly active users MAU would reach 220 million in 2021, and now it may be accelerated ahead of schedule.The strategic thinking of this company with the ability to “screen brush in the circle of friends” is embedded in this process.
The highlight of the company’s just released quarterly report this year is the significant increase in the user base.MAU reached 172 million, an increase of 40 million from the previous month and an increase of 70 million from the same period last year.Seasonal factors (Q1 and Q3 quarters where winter and summer vacations are the peak season for their performance) have been amplified due to the epidemic, and the length of the winter vacation has become the summer vacation, allowing the normal summer summer traffic of station B to flow into the Q1 season in advance.
The platform leveraged its strength and relied on high-quality content and community capabilities accumulated over the years to catch up with these surges of traffic, which is reflected in the increase in the duration of single user use and the stability of the retention rate of new users.In addition, the New Year ’s Eve party and a series of brand building plays a major role in attracting new “outside” users and attracting new users.
During the home stay period, more users paid to become members of the B station to watch more professional content. This significantly increased the overall monthly number of paying users in the first quarter, reaching 13.4 million, breaking 10 million for the first time, and the year-on-year growth rate of 134% was 1Q19.New high since.The 7.8% user conversion rate in the first quarter was the highest in all quarters after the IPO.This shows that the quality of new users is good, and there is no sense of belonging to the platform for users with low stocks.This is the foundation of the platform monetization.
Station B currently operates 29 exclusive agency games (20-F data). Due to the important content update of the pillar game “Fate / Grand Order” in the first quarter, and the excellent performance of intermodal games such as “Ark of Tomorrow”, its gamesFor the first time, single-quarter revenue exceeded 1 billion and reached 1.15 billion.
In the same period, Tencent’s excellent performance also boosted the company’s overall performance.The revenue structure of the game business of Station B returned to 50% in the first quarter, but it did not “crowd up” the live broadcast and the revenue of large members. The latter accounted for 34%, the highest in history.Games and value-added services (including live broadcast and big membership) are the most profitable business of Station B. Therefore, in the first quarter, the overall gross profit margin was raised to 23%, and last year were below 20%.However, due to seasonal factors and the epidemic situation, in the first quarter, the revenue of the two stations, advertising and e-commerce, both decreased significantly from the previous month, and remained flat year-on-year.
This table counts the growth of Bilibili’s number of users and “up master”, ie content producers, for five consecutive quarters.1Q20 (i.e. 2020Q1) performed significantly better than previous quarters.Compared to MAU growth, what is easily overlooked here is the change in content producers. The average number of monthly active users in the first quarter increased by 1.07 million over the same period last year. This increase is equivalent to the total number of monthly active users in the third quarter of last year..
Different from the long video website, the community relationship between content producers and consumers is the core factor that promotes the growth of both parties. Growth is not unilateral under the platform effect.If you ignore the role of producers, it is easy to conclude that the growth of users at site B depends on traffic purchase, epidemic situation, brand launch, etc., but the continuous emergence of high-quality content can attract more users to stay, which constitutes a natural growth of users.The spiraling relationship between producers and consumers is the main factor supporting station B’s future platform stickiness.
Under this logical relationship, Bilibili ’s long-term strategy will still be placed on community ecological construction, such as more interaction between the host and users; a more diversified content structure; technology iteration makes the content recommendation algorithm more accurate,In this regard, YouTube has a good reference value.
From another perspective, the performance achieved in the 1Q20 season does not indicate that Station B will embark on the road of short-term growth through large-scale market launches and vigorously subsidizing the production and consumption sides.It is still more cautious and restrained.If the pace is too large, the gain may be outweighed. This “loss” may destroy the natural growth ability of the community users. This natural growth is the unique value it cultivated from the early secondary community.
WeChat opened the test video number in early February, bringing some changes to the production of short videos.There are a lot of video Xiaobai being drawn into the creators team, many of which are producers from pure graphic expressions to video expressions. They focus on professional fields such as finance, technology, film and television entertainment, and use B station as the main platform. HereThe community interactivity, knowledge atmosphere, video duration, etc. are more suitable for this type of video creation, which is quite different from the content production style and distribution method of Douyin, Kuaishou, and Watermelon videos.In the first quarter, the top five categories of B-site video playback were life, games, entertainment, animation, technology, popularization and professional content, continuing the content playback structure since 2019.
In addition to the issuance of convertible bonds, Bilibili has introduced three strategic investors in its financing: Tencent (holding 12.7%), Alibaba (6.8%) and Sony (4.98%), and their respective businessesCooperation is placed on the content production side.Tencent can bring value in terms of copyright and channel cost; Alibaba can enrich the commercialization methods of the main owner; the cooperation with Sony is based on IP and will cover the entire ecological level of games, animation, music and so on.Sony has previously seen the user potential and community stickiness of the B station in the cooperation of authorized agents of the game “Fate / Grand Order”. For the B station where the proportion of home-made content in assets is increasing (relative to outsourced copyright),It is also willing to penetrate from the game to the cooperation of the entire IP chain.
The operating cash flow, investment cash flow and free cash flow of the businesses of Sony ’s divisions are in billion yen, source annual report
Sony’s recently released results for the fiscal year ended March 31, 2020 show the problems and choices of this veteran entertainment giant.Annual sales revenue was 825.9 billion yen, a year-on-year decrease of 5%; operating profit was 845.5 billion yen, a year-on-year decrease of 5% (excluding adjusted equity sales and other adjusted operating profit, a year-on-year increase of 1%).Among the six segment results, game and network service revenue decreased by 14% year-on-year, mainly due to the decline in sales of game software and PS4 game consoles.The revenue growth of the music business is due to the merger of Sony ’s acquired EMI and the pull of the streaming music business.This coincides with the B station’s active layout of music copyrights. For example, Sony’s song MV is stationed in B station.
Changes in Sony Music ’s annual revenue and operating profit in billions of yen, source annual report
The Chinese market has high hopes from Sony.According to regional statistics, Sony’s revenue in China has increased from 11.4% in FY2018 to 13% in FY2019, an increase that exceeds the European, American and Japanese markets.There has been good cooperation in the game before. The community user value of station B is undoubtedly very important in Sony’s eyes. From here, I can understand the younger generation of Internet users in China.
Tencent’s recent move to take over the management group of Reading Group conveys a value judgment of the entertainment industry, that is, whether it is online literature, animation, music, or video, the IP industry chain is the trend, and “interlacing profits” is the trend.Not done.Sony has relatively rich experience in this area, and Station B can continue to promote its IP strategy on professional content, and is expected to obtain more external resources.For the trend of increasing the proportion of content costs in the cost structure of station B year by year, the alliance with Sony and Tencent will help the future content acquisition costs.
Bilibili’s equity incentive expenditure details, source 20-F Annual Report
In recent quarters, the expansion of the Bilibili community ecosystem has been accompanied by an increase in losses (Non-GAAP Income after removing equity incentives and copyright amortization in the first quarter was -450 million, and the chain loss increased by approximately 110 million).Under the premise of a steady increase in gross profit margin, the increase in expenses is mainly due to proactive market behavior and technology investment.At present, Station B has entered a new stage of brand building and technology investment, and investment matching the size of the community is necessary.
In the past two years, the company’s equity incentives for R & D personnel have doubled, and in order to ensure the user experience under the trend of content diversification, content recommendation technology with thousands of people is needed.The investment in brand building will attract more advertisers. McDonald’s chose to broadcast a new product on station B last month. Huawei, OPPO, vivo also released new products through station B this year.
Bilibili’s share price trend in the past year, from Yahoo Finance
Whether it is the rapid rise of live broadcasts and paid members, or trying new monetization forms such as paid courses, the diversity of Bilibili monetization is based on the user base and the sense of community belonging.Between domestic short video (advertisement) and long video (subscription), Bilibili has found a unique form and space for survival.As the only company in China that can benchmark YouTube but is different from the YouTube business model, from the perspective of its stock price performance in the past year (the first time it broke through $ 30 last week), Bilibili was given patience by the market to observe its long-term investment value.

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