Pivoting away from anime, Bilibili has grown up with its users, attracting investors ahead of secondary listing in Hong Kong

Tracy Qu
·8-min read

Once known primarily for its anime offerings, Chinese streaming platform Bilibili might seem like an odd place for an exclusive interview with the head of the world’s most valuable technology company. But Apple CEO Tim Cook’s interview with 22-year-old tech influencer He Shijie shows just how far the platform has come.

When He first started uploading videos to the platform in the summer of 2017, it was still largely known for catering to a niche community interested in the anime, comics and games (ACG) subculture. More than three years later, He is one of the most-watched opinion leaders on digital products. His 18-minute video with Cook, conducted in English with Chinese subtitles, has so far garnered more than 8.3 million views.

Similar to Google’s YouTube, Bilibili has grown up with its users, becoming a place for content creators of all types. As Bilibili prepares for its secondary listing in Hong Kong, three years after going public on the Nasdaq, its namesake streaming platform has become home to a wide variety of content, covering topics as diverse as finance, law, travel and, of course, cat videos.

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“I think Bilibili is not only about ACG, but it’s also a diverse community now,” said Zhu Shimin, a 25-year-old who works in the environmental industry. “I feel like it was bound to happen. After all, Bilibili is a company, which needs to develop and grow up.”

Zhu is one of 54 million people who use Bilibili every day. She is also one of many users who told the South China Morning Post that they initially used the platform for Japanese animation when they were younger but now embrace its more diverse content.

Zhu said she has been an anime fan since primary school and spends more than two hours on Bilibili almost every day. In addition to anime, she uses the site for movie clips, videos of cute dogs and cats, and interesting food and travel content.

Tim Cook interview with young tech vlogger goes viral in China

By cultivating creators like He, Bilibili has been able to carve out a unique niche beyond the ACG community, allowing it to grow in a saturated market full of competitors such as Netflix-like platforms Tencent Video and iQiyi, owned by Baidu, and short video platforms like Kuaishou and Douyin, ByteDance’s Chinese version of TikTok.

After raising US$483 million in its initial public offering in New York three years ago, Bilibili is now approaching a US$40 billion market capitalisation and seeking up to HK$24.7 billion (US$3.2 billion) in its secondary listing, with the retail tranche priced at a maximum of HK$988 per share. The shares are scheduled to debut in Hong Kong on March 29.

While the company is not yet profitable, it is backed by internet giants Tencent Holdings and Alibaba Group Holding, through its e-commerce platform Taobao Marketplace. Alibaba owns the Post.

Bilibili has also attracted investment from overseas, with Sony ploughing US$400 million into the company last year. This has given Bilibili room to grow to the point of no longer relying on mobile games for most of its revenue.

Bilibili’s New Year’s Eve celebrations, streamed on the video platform on December 31, 2019. Photo: Handout
Bilibili’s New Year’s Eve celebrations, streamed on the video platform on December 31, 2019. Photo: Handout

In 2020, the company’s losses widened to 3 billion yuan (US$460.5 million/HK$3.6 billion), more than double the 1.3 billion yuan it lost in 2019 and five times the 565 million yuan lost in 2018. Revenue from mobile games was down to 29.4 per cent of its total revenue in the fourth quarter, though.

That was down from 44 per cent a year earlier and from 83.4 per cent for all of 2017. Gaming was surpassed for the first time by value-added services, a category that includes premium subscriptions, live streaming and a comic book platform.

This diversification has proven enticing to investors. Bilibili was oversubscribed 56 times in Hong Kong by Monday evening. Among its main selling points is a young and loyal audience.

Bilibili’s daily active users rose 42 per cent in the fourth quarter, with each user spending an average of 75 minutes on the platform every day. The company said in its prospectus that 86 per cent of active users were born between 1985 and 2009, a cohort it refers to as Gen Z+.

Bilibili has been spending lavishly to expand its user base over the last few years as it sought to break away from niche content into the mainstream. Company CEO Chen Rui said the company aims to have 400 million monthly active users by the end of 2023, twice what it has now. Last year, the company spent 3.5 billion yuan on sales and marketing, a 191 per cent increase over 2019.

Those expenses involve extravagant campaigns, including a New Year’s Eve complete with high-profile celebrities. The 2020 gala was put on in partnership with state-run news agency Xinhua and recognised as a major event designed to help Bilibili “break out of its circle”.

Like other video streaming sites, Bilibili has also produced more conventional fare like the TV drama Run for Young and music reality show Rap for Youth.

Many new users, which Bilibili is trying very hard to win over, are not ACG fans. Richard Pan, a technology professional, said he watches videos on finance, law and wine. On a Sunday night, he made a cocktail with the help of a video guide on Bilibili.

“I don’t have to be an ACG fan to watch Bilibili,” the 26-year-old said. “As a regular guy, I also watch Bilibili.”

This expansion into new areas has been good for revenue. Monthly paying users doubled year on year to 17.9 million in the fourth quarter. But the shift is also causing consternation among some of Bilibili’s traditional users.

Yonee Chen, a university student in the city of Zhuhai in China’s southern Guangdong province, feels the content on Bilibili is getting “red” with mainstream communist values as a result of tighter scrutiny from Chinese regulators. A lot of government agencies have set up accounts on Bilibili, further raising awareness of the platform, she noted.

“Back in the days when Bilibili was smaller, there was quite a lot of controversial content on topics like same-sex romance,” said the 19-year-old, who has been using Bilibili for over five years, primarily for videos about sports and film. “But I guess the upside of the closer supervision is that it held some users back from making disgusting dirty jokes.”

Rapid user expansion has also meant more trolls in the comment section, a problem for a platform whose signature feature is having comments fly across the screen while a video plays. Hugo Lam said he had to set up a keyword filter to block some of these so-called bullet comments.

“Breaking out of its initial circle has drawn a more generic group of users with very different values than those of ACG fans. The comment sections and bullet comments can easily get hostile and the rows quickly escalate, especially around fandom and social issues,” he said. “That’s a very upsetting experience for the users.”

Bilibili did not immediately respond to a request for comment.

The culture clash between new and old users became apparent in January when fights broke out over the anime Mushoku Tensei: Jobless Reincarnation. Some said the show was misogynistic and featured “paedophilia” and “soft pornography”.

Bilibili faces a boycott over anime show said to be insulting to women

In early February, Bilibili removed the show, but it also banned popular content creator LexBurner, who had criticised the anime. Bilibili said the LexBurner violated its rules and “made many inappropriate comments while live-streaming”. The company’s handling of the issue sparked more criticism, which led some brands to stop advertising on the site.

The show’s removal might not be a big deal for Bilibili, according to Arch Pei, an independent internet analyst who previously worked at Sinolink Securities. But it has been an unsatisfying ordeal for many users.

“The conflict between old users and new users has escalated,” Pei wrote in an article posted to an official WeChat account. “Bilibili’s response is to blame both sides equally, which seems fair, but it actually leaves both sides very unhappy.”

Charlie Chai, an analyst at 86Research, had a more positive outlook. “The young users may use radical means that sometimes cross the line, but the overall significance of Bilibili is that it is still progressive, which will only grow even further over time,” Chai said.

As Bilibili grows in clout, it is also facing challenges from other up-and-comers trying to snag a larger portion of China’s large pool of video streamers, which reached 870 million in 2020, according to QuestMobile. ByteDance’s Xigua Video has been catching up quickly, aided by its powerful recommendation algorithm that has made TikTok a global hit.

The company also has 15 million content creators, compared with 12 million on Bilibili, according to data provider BigOne Lab.

A bigger challenge for Bilibili is ensuring many of the platform’s new users are willing to pay so that it is less beholden to the ACG fans who are already subscribing. “New users have to contribute revenue … otherwise it is a useless expansion,” Pei wrote.

Despite the unresolved rift among its users, the company’s CEO has maintained his faith in the community.

“As long as users stand by Bilibili, Bilibili will be invincible,” Chen said in a previous interview. “This is my faith.”

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