Bilibili, a Chinese video streaming and gaming platform focused on anime-related content, reported a 76 per cent increase in total revenue to US$155.1 million for the quarter ended June 30, beating average analyst estimates of US$146.3 million, but warned of higher operating costs due to an industry-wide crackdown on content by Beijing.
Nasdaq-listed Bilibili announced its earnings after the market close on Monday. Bilibili also reported average monthly active users (MAUs) of 85 million during the second quarter, a 30 per cent increase year-on-year.
“Revenue contribution from our advertising, live broadcasting and value-added services continues to grow. As we ramp up our commercialisation strategy for non-gaming businesses, we aim to further broaden our reach, increase our brand equity and further diversify our revenue streams,” said Sam Fan, CFO of Bilibili.
Bilibili had a setback when its app was removed from several Android app stores in China on July 26, following a crackdown on content deemed inappropriate by China’s Central Cyberspace Administration. It returned to all app stores on Saturday and the suspension didn’t affect users who had already downloaded the Bilibibi app. However, a wider crackdown on gaming content by the State Administration of Radio and Television has meant no new licences have been issued for games in China since March 28, contributing to a slowdown in China’s overall gaming market. Revenue was up 5 per cent in the first half, the first single digit growth in at least a decade.
Despite Bilibili being restored to app stores, the suspension prevented the platform from adding new users in the past month.
“The 30-day suspension will affect our new user acquisition and revenues to a certain degree, but will not exert an influence on our overall growth in future,” said Chen Rui, Chairman and CEO of Bilibili, during the earnings call. Chen predicted that the average MAU number for the third quarter will be more than 90 million.
Aside from the impact on new user accumulation, the content crackdown campaign will also increase Bilibili’s operational losses, said Chen, as Bilibili will not only “fully cooperate with the relevant authorities” but will also will conduct self inspection of content and “double the headcount of content monitoring personnel”.
Mobile games, the major source of Bilibili’s revenue, contributed US$119.5 million in the second quarter, up 61 per cent year-on-year and accounting for 77 per cent of total revenues.
China’s gaming companies, including industry giant Tencent, have all felt the chill wind of a halt in game approvals during the content crackdown and overhaul of China’s content regulators – including personnel. Tencent reported its first profit decline since 2005 in the second quarter.
“I believe it’s just a temporary delay [of game approvals], not a long-term problem,” said Chen. “During the waiting period, we are actively preparing for the release of our new titles.”
Bilibili shares have hovered around US$11.50 during August after coming down from a high of US$21 in June.