"Breaking even in 2024", the commercialization of Station B has entered a countdown.
author | Zhang Kaijing
editor | Interesting business
Station B, which has been losing money all year round, handed over a third quarter report with a significant reduction in losses, but it intensified the "departure" of investors.
After the market closed on November 29, the financial report released by Bilibili (9626.HK) showed that in the third quarter of this year, the company achieved revenue of 5.81 billion yuan, which was the same as the same period last year; the net loss was 1.3 billion yuan, which was the same as the same period last year. Narrowed by 22%; adjusted net loss was 864 million yuan, narrowed by 51% year-on-year.
Another eye-catching data is that in the third quarter, the daily active users (DAU) of Station B exceeded 100 million for the first time, a year-on-year increase of 14% to 103 million.
B station attaches great importance to this breakthrough. In the financial report conference call that night, Chen Rui, chairman and CEO of Bilibili, emphasized that "the user base is one of the key advantages of Internet products" and said that "100 million DAU is just the beginning."
However, the market did not seem to be moved by the "new story". On November 30, the stock prices of Station B's Hong Kong and US stocks fell sharply by 10.99% and 11.09% respectively; on December 1, the stock price of Station B continued its downward trend, closing at HK$87.3 /share, hitting a new low within a year, with a cumulative decline of 19.46% in the past four trading days.
Now, the goal of “achieving breakeven in 2024” set by Station B CFO Fan Xin in 2021 has entered the final countdown. At this critical juncture, can Bilibili rely on hundreds of millions of daily active users to "just meet the needs" and turn around and "come ashore"?
01. Relying on cost reduction and loss reduction, user growth dividends weaken
With almost no year-on-year revenue growth, the key to reducing losses for Station B lies in the continuation of the previous "cost reduction and efficiency improvement" strategy.
In 2022, Bilibili was exposed to layoffs in many departments including games, live streaming, overseas business, e-commerce, etc., with positions covering R&D, operations, personnel, etc. At the same time, the company's business lines are also shrinking, and many internal self-developed game studios have gone offline. The "combination punch" of
once increased the company's expenses in a short period of time. Because "optimization" requires severance pay, if the project is terminated, there will be depreciation expenses for servers and equipment. But these are only short-term problems, and the effects of "optimization" will begin to show this year. In the third quarter of
, Bilibili’s operating costs decreased by 8% year-on-year. The company said that it was mainly due to the reduction in content costs, server and bandwidth costs. At the same time, the company’s general and administrative expenses decreased by 8% year-on-year. R&D expenses decreased year-on-year due to the decrease in employee-related costs. 6% reduction.
B station’s idea of burning money to acquire customers has also changed. In the third quarter, the company's sales and marketing expenses decreased by 19% year-on-year, and the company's promotional expenses related to customer acquisition decreased significantly. Even so, daily activity still achieved double-digit growth, and the average daily usage time of users rose to 100 minutes, a record high.
This reflects Bilibili’s intensive cultivation of community ecology. The balance between the number of users and the atmosphere on the site is an unavoidable problem on the way to "break the circle" of Station B, but the company seems to have found a way to solve the problem.
In the third quarter, the average daily video playback volume of Station B increased by 26% year-on-year, and the average monthly number of interactions increased by 18% year-on-year; the average daily active UP master increased by 21% year-on-year, and the average monthly video submission volume increased by 37% year-on-year; and as of the third quarter At the end of the year, the 12th month retention rate of official members of Station B has always been stable at around 80%.
But we must also see that the dividends from station B’s user growth are constantly weakening. From 2020 to 2022, the lowest year-on-year growth rate of daily activity in a single quarter of Station B dropped from 42% to 25%, while in the third quarter of this year it was 14%.
And with more and more UP main contributors and more and more users watching videos, the revenue growth of station B has stagnated. In the third quarter, it only increased slightly by 0.2%, and the growth rate hit the lowest level in a single quarter since 2021. . This may be what worries many investors.
02. Of the four core businesses, "half" fell sharply
Specific to the revenue structure, the four main businesses of Station B coexisted with growth and decline: in the third quarter, driven by the live broadcast business, the value-added service business revenue of Station B was 2.6 billion yuan. A year-on-year increase of 17%; advertising business revenue was 1.6 billion yuan, a year-on-year increase of 21%.
However, the game business, the "cash cow" that Bilibili once relied heavily on, fell by 30%, achieving revenue of 990 million yuan, a year-on-year decrease of 33%; IP derivatives and other businesses (formerly known as e-commerce and others) also performed poorly. , achieving revenue of 580 million yuan, a year-on-year decrease of 23%.
B The change in strategy of the game is obvious. In the conference call after the third quarter report, the company’s chairman Chen Rui responded for the first time to the rumors of cutting off some game projects. In his view, the game market has entered the stage of stock competition. In the new stage, games need to meet at least three criteria: long-term operation, top category, and reasonable cost in order to make money.
Therefore, the company has indeed cut down some projects that do not meet the standards and is focusing resources on relatively competitive projects. In this process, there will inevitably be some "pains".
But in terms of e-commerce, Bilibili has been accelerating. Users of station B may have a deep understanding of this. The most obvious sign is that among the UP owners they follow, more and more people are participating in live broadcasts to bring goods.
is different from most e-commerce platforms. Bilibili e-commerce currently focuses on the "big open loop" strategy. The content ecology will be opened to platforms such as Taobao, JD.com, and Pinduoduo, and it will serve as a platform for grassroots cultivation and traffic diversion.
For example, during this year’s Double 11, users can find the “Tmall Double 11” section through the “Double 11” entrance at the bottom of Station B and jump to the Tmall platform. Usually, if users want to shop at Station B, they need to click on the UP main homepage and then enter the display window to see products from other platforms.
In order to achieve growth through the development of e-commerce business, Bilibili also plans to adjust its organizational structure to strengthen the links with merchants and UP owners.
is aimed at the merchant side. Station B has launched the Spark Plan, which gives merchants more and more accurate data to facilitate them to measure the effectiveness of grass planting and select suitable UP owners to bring goods; for the UP owner side, Station B’s "Supernova Plan" ” will provide them with services including product selection guidance, traffic support, after-sales, etc., to facilitate them to get started with live streaming and bring goods faster.
Yibang Power data shows that during this year’s Double 11 period, a total of 57 UP hosts started broadcasting from October 23 to November 11, of which 11 were awarded the title of Top 100 UP hosts. In addition, during the same period, the GMV of UP's main video and live streaming products increased rapidly by 251% year-on-year, and the number of live streaming sessions increased by 105% year-on-year.
But even so, Bilibili’s e-commerce revenue is still showing a downward trend. On the one hand, the potential energy brought by the "big open loop" model is more concentrated on the advertising side. On the other hand, Bilibili e-commerce is inevitably "subject to others." Behind the lively and prosperous scene of
, the UP owners of station B are essentially helping others to bring goods. Their bargaining power is relatively limited, and they may even bring risks to their own reputation.
For example, in June, Bao Jiansao’s first live broadcast earned 28 million GMV, but has since been questioned as being too high in price; the prunes sold by Pirate Moon Society also had the same controversy; the papayas, coconuts, and hairy crabs sold by Uncle Da Mo were even more controversial. Problems occur frequently... If UP owners want to "not overturn", they have to walk on thin ice.
In this context, it is difficult for Station B to continue to establish benchmark-level live broadcast rooms and top anchors like Xiaohongshu, Taobao, Douyin and other platforms. The UP owner “Mr Mi Da” has indeed performed well. The cumulative payment amount across all channels during this year’s Double 11 Home Decoration Festival reached 1.68 billion, a year-on-year increase of 500%. But if Station B wants to completely develop its e-commerce business, it is obviously not something that can be achieved with just one or two UP owners like "Mr. Midai".
03. “Coming ashore” in 2024, what’s the difficulty for Station B?
At the beginning of 2022, Chen Rui said that on the premise of maintaining user growth, Bilibili’s strategic focus will focus on accelerating the commercialization process. This is seen by the outside world as a sign that Bilibili is beginning to pay attention to "making money to support the family" after losing money for several years.
However, commercial development cannot be achieved overnight. Bilibili started late, and its previous investment was insufficient. Coupled with its own community attributes, it has made it more difficult to promote commercialization.
is the first to bear the brunt, and Bilibili has to take into account the uncertainty of the game business.Industry commentator Zhang Shule believes that the game business of Bilibili is the focus of its breakthrough and profitability. If the company can regain this huge market and achieve a breakthrough in the two-dimensional hot products, it can achieve a revenue balance and realize a complete recovery. The difficulty lies in the success or failure of competition in the game category. It’s not that
B doesn’t want to make good games. Just last year, Chen Rui just took charge of the game business himself. However, several new games launched on Bilibili this year, such as "Shaoguanglu: Princess of Troubled Times" and "Slude", all performed mediocrely. "Shine!" "Youjun Girl" even took the initiative to be removed from the shelves only 9 days after it was released for public beta. In this context, combined with the news of the dissolution of "Xinyuan Interactive", the Guangzhou game development studio of Bilibili, the outside world has speculated whether Chen Rui's mentality has changed. After
cut off many projects, it has been difficult for the game to maintain its status as the company's "cash cow". However, commercialization still has to be cracked, so Bilibili can only bite the bullet and "make up the lessons". In the process, it is inevitable to add additional resources. The investment and support from relevant sectors will be used to promote and improve the infrastructure for commercialization.
In the third quarter of this year, even though the overall operating costs of Bilibili decreased, the revenue sharing cost still increased by 3% year-on-year. This was mainly due to the increase in incentives or sharing amounts given to UP owners in the live broadcast and advertising business. To.
However, these current methods of increasing revenue for platforms and UP owners are still immature.
A noteworthy phenomenon is that the share given to UP owners at Station B has obviously increased, but many UP owners still report a decrease in income, and statistics show that among the first top 100 UP owners at Station B in 2018, nearly 20% of UP owners have stopped updating.
Behind this is the change in the content monetization mechanism of Bilibili. For a long time, UP owners have been monetizing mainly through platform incentives and business cooperation. The former is the income that UP owners get from the video evaluation mechanism such as the number of plays, coins, and likes of the video. The latter depends on UP. Whether the owner can get orders for "just rice" and softly implant the brand in the video. Since 2021, Station B has increased the weight of commercial cooperation, which has made UP owners who can accept advertisements more popular.
However, at present, the advertisers of Bilibili are still focusing on home decoration, 3C digital, etc. These advantageous categories that match the user attributes of Bilibili are not yet enough to support its commercial needs. The platform still needs to continue to increase its investment in automobiles, beauty, FMCG and other fields.
Similar monetization problems also exist in live broadcasting and e-commerce. Although there are frequent moves, Jiang Han, a senior researcher at Pangu Think Tank, believes that Bilibili’s e-commerce business is still in the trial stage. Although it has launched welfare societies and small oasis attempts, the scale and popularity are relatively small and require more time. and resources to nurture and develop.
cannot develop without investment, and it is unknown whether the return on investment can meet expectations. One can imagine how difficult it will be for Station B to achieve breakeven before 2024.
At the same time, the impact of commercialization on the atmosphere on the site is also a difficult problem. Zhihu: "Bilibili will have a net loss of 7.5 billion yuan in 2022. What do you think of this data?" The most upvoted answer to the question is to complain about the advertisements of Bilibili: "The frequency of spam advertisements of the same type appears too high "No, it's useless to click block." "How to make acne marks disappear completely, I have tried it more than a dozen times"...
However, Zhang Shule said that traffic advertising itself is between the platform and content creators. There is a balance in this commercialization. There is no good or bad in this commercialization. It just depends on whether the platform can provide enough incentives for content creators to output positively and upward. This is not just about advertising sharing, but also about platform orientation.
"The goal of 2024 is not easy to achieve." Jiang Han, a senior researcher at Pangu Think Tank, said that in terms of e-commerce, Bilibili, as an emerging platform, still needs time to accumulate word of mouth and user loyalty. But at present, it seems that Bilibili’s main business is still in the fields of pan-entertainment such as games, animation, and music. Since
publicly disclosed its financial report, Station B has been losing money for eight consecutive years. If there is a scenario of losing money for 10 consecutive years, Station B will not be able to explain to investors and the market.In order to prevent this situation from happening, Station B needs to think about how to make full use of the resources of hundreds of millions of daily active users and rely on e-commerce as a monetization method. How far it can develop may determine the future of Station B.
