Sep 24, 2020
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Chinese Millennials Are Flocking To This Anime And Gaming Site, But Can It Make Money?

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Rui Chen chairman and CEO of Bilibili Inc. stands for a photo during the company s initial. [+] Anime and games have long been an obsession for Li An but the 30-year-old IT worker from China s southern city of Shenzhen can only spare about an hour an afternoon to indulge his interest


When he goes online to observe videos of his latest fascination a sci-fi game about androids taking on the realm there are several platforms competing for his attention but he s a loyal fan to only 1 site. I found Bilibili when I used to be in college Li said


It s still one in all my favorite pastimes today. Li is one in all more than 77. 5 million Chinese fans watching the animation and gaming videos hosted by Bilibili every month. The Nasdaq-listed company sees that user base which is both Internet savvy and dependable as its biggest advantage


Bilibili s Chief Executive Chen Rui told local media recently that its strategy is to offer more online services consisting of gaming and paid memberships so it could boost revenue and begin turning a profit. The company s revenues more than doubled to $138 million inside the first quarter this year with losses shrinking to $9


2 million. Led by its 40-year-old Chief Executive Chen Rui a self-confessed anime fan himself in addition serial entrepreneur Bilibili has carved out a formidable niche while going up against Internet giants like Alibaba and Tencent that have been spending billions in a cutthroat race to dominate the rustic s massive online video market


Analysts say Bilibili has some unique advantages but it remains to be seen whether the company can turn a profit while keeping all those Chinese millennials engaged. Unique Culture Bilibili has developed several unusual features that distinguishes it from rival sites. In addition to providing content through exclusive partnerships with local artists and overseas studios the platform has created various easy methods to immerse its users inside the so-called er ci yuan culture


The term which loosely translates as a two-dimensional space is widely used in China to consult with the virtual world of anime comics and games. Bilibili is like a community of young fans says Tong Chen managing director of investment firm IDG Capital which has invested inside the company. In China there isn t any similar platform of this scale and this is keeping users highly engaged


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VT Engage Rally The Youth Vote On Campus A screenshot of Bilibili s website BY YUE WANG One such feature is membership to the positioning that enables users to achieve access to more content by passing online tests with questions that range from company history to Japanese manga artists


Members also have access to more interactive functions like bullet-screen chatting which permits multiple viewers to type in comments which are shown simultaneously across a streaming video like darting bullets. Bilibili s users spent a median of 78 minutes inside the platform daily in April up from 73 minutes in March per consultancy Analysys International


As Tong says Bilibili s user base is distinctively young: More than 55% of its viewers are below 24 compared with 18% to 19% at Alibaba s Youku Tudou Tencent Video and the Baidu-backed iQiyi Analysys International data shows. The rest of Bilibili s fans are mostly long-time followers like Li who started to visit the positioning during his first year of university and helped to spread its popularity through word of mouth


Right Expertise Chen who was a founding member of New York-listed mobile apps maker Cheetah Mobile before joining Bilibili in 2014 also has an official page at the site that uses a Japanese cartoon as his profile picture. He regularly engages with users by commenting on trending clips and admits to being keen on popular anime series including Fate/Apocrypha and Re:Creators


More important than Chen s online interactions has been the talent Bilibili has recruited. The company was initially founded in 2009 by Xu Yi 28 who built the prototype site. He later gave control to Chen but stayed on as president to take charge of its community culture per its prospectus


Chen has since been upgrading the company s technology expanded its team to two 000 and introduced more services consisting of anime-themed games and pay-per-view shows. This is rare to find someone of Chen s age who understands Bilibili s youth culture in addition having the right expertise to manage the firm IDG s Tong says


Attendees dressed in anime costumes hold Bilibili logos during the company s initial public offering. [+] Still Bilibili is nowhere virtually achieving Chen s grand ambition. The company says in its prospectus that it has evolved into a full-spectrum online entertainment world covering video live broadcasts and mobile games but it still has yet to figure out a way to make money beyond gaming


Bilibili depends upon mobile games – chiefly the Fate/Grand Order and Azur Lane titles which are both licensed from Japan — for up to 80% of its revenue. The imbalance is a risk since it shows the company s main operation of video streaming isn t becoming a revenue driver says Ma Shicong an Analysys International analyst


And this seems unlikely to alter anytime soon. In China individuals are just commencing to open their wallets for content after years of rampant piracy that severely hindered subscription-based memberships. For Bilibili this means that related payments are unlikely to contribute much to revenues any time soon says Guo Chengjie an analyst at Beijing-based consultancy iResearch


Rising Competition Meanwhile the company s prior experience at selling advertising – a significant revenue source at other Chinese video services – sparked an online backlash. In 2016 Bilibili placed ads in numerous Japanese anime series which angry users spoke of was in violation of the founder s promise of forever no ads inside the videos on its site


Chen quickly made a public apology  and now the positioning only carries banner ads. Inside the meantime competition has been heating up. In a bid to attract young users iQiyi Youku Tudou and Tencent Video are all beefing up their anime channels with the Tencent-backed video-sharing site Kuaishou recently acquiring Bilibili rival AcFun for an undisclosed amount


The increasing competition means content costs will go up as everyone races to sign distribution partnerships with a limited variety of studios says Analysys International s Ma. IDG s Tong remains optimistic. Bilibili already made itself into China s most desirable anime streaming site with a dedicated ecosystem hard for other platforms to copy he says


But he also acknowledges that monetization should happen differently in order not to offend sensitive users. It could have to offer more games in niche genres not dominated by giants like Tencent and NetEase. Monetization is at the very early stages he says. If not done right this will affect user experience


But as long as the company can keep people engaged and spend longer periods of time inside its platform monetization is bound to happen someday

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