Streaming video operator Bilibili at a crossroads with focus on increasing users

Tracy Qu

When high school student Shan Wenran signed up to join video-and-animation-sharing site Bilibili six years ago, she was surprised to find that membership entailed passing a lengthy examination. The 100-question test included zingers like who was “the lead singer of the Japanese Rainbow band” and “the starting goalkeeper of the German men's national soccer team”.

“I tried to answer one or two questions and then quit,” said Shan, now 24, from the eastern coastal province of Zhejiang. “It was troublesome, and I didn’t know the answers to those questions.” Shan said she took the exam again in college and passed.

Shanghai-based Bilibili, founded in 2009, has become the biggest video-comics-and-gaming entertainment platform for China’s fast-growing Generation Z market segment, made up of consumers born between 1990 and 2009. But the company, according to analysts, has also reached a crossroads, which could hasten its decision to further water down its rigid examination to increase the number of its users and better compete against larger players in the country’s online streaming video services industry.

“Over the years, we have gradually lowered the difficulty of the 100-question exam,” a spokeswoman for Nasdaq-traded Bilibili said in an emailed statement. “This is because we have developed more ways to maintain our community’s environment and enhance our users’ experience. With such capabilities, we don’t have to rely as much on the exam.” Those included community behaviour protocols, user whistle-blowing functions, more accurate content recommendations and a larger inventory of high-quality content.

Attendees dressed in anime costumes hold Bilibili logos during the company's initial public offering in New York on March 28, 2018. Photo: Bloomberg

Bilibili had about 54 million total users who passed its exam as of the second quarter of this year. Qualified members gain the privilege of posting bullet comments, a popular Bilibili mechanism that enables comments to float directly above a video, which can be scrolled on screen. Bullet comments can either be in real time or left by previous viewers pegged to specific moments of a video. It is like chats on US video streaming service Twitch, but superimposed on the video.

Bilibili’s sharpened focus on user growth would help it develop into a major industry contender behind Chinese streaming video giants iQiyi, Youku and Tencent Video – backed, respectively, by internet titans Baidu, Alibaba Group Holding and Tencent Holdings. Alibaba is the parent company of the South China Morning Post.

With the world’s biggest internet population of more than 800 million, China has seen increased consumption of online video content. Baidu’s iQiyi leads this market with about 588 million monthly unique device users, followed by Tencent Video with 549 million and Youku with 398 million, according to iResearch estimates in September. By comparison, Bilibili plans to reach 220 million monthly active users in 2021, up from 120 million to 130 million by the end of this year.

While its time-consuming exam has helped Bilibili build up a loyal community – more than 60 per cent of its early users in 2009 remain active at present, according to its spokeswoman – the number of users have not grown as rapidly as other streaming video platforms.

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“Balancing the growth and culture of the community is at the core of the issue,” said independent internet industry commentator Zhang Dingding, former head of Beijing-based research firm Sootoo Institute. “I don’t think the decision [of lowering the standards of its examination] would have much impact on existing users, but Bilibili needs to be more considerate about the sentiment of its early users.”

Bilibili currently allows a qualifying score of 60 for a user to pass its membership exam. The Post recently took the exam – which covered community rules, bullet comment items and other topics – and spent half an hour to achieve a pass, with some help from Google search.

“If I needed to pass a 100-question exam to become a member, then Bilibili may not be in my life right now,” said Sean Feng, who works in Hong Kong’s finance industry and became a Bilibili member before the company set up its exam. “I’d rather pay to be a Tencent Video member.”

Bilibili founder Xu Yi officially launched the site in January 2010, with a focus on building a community of anime video-sharing users. It has since expanded that community to cover a wide array of genres and media formats, including live broadcasting, mobile games and so-called professional user-generated content. Xu, who received his associate degree from Beijing University of Posts and Telecommunications in 2010, has served as the company’s president since 2013.

Following Bilibili’s Nasdaq listing in March last year, Tencent invested US$317.6 million in the company in October of the same year. Later in December, Bilibili entered into a business collaboration deal with Alibaba’s Taobao Marketplace, which is geared towards content-driven e-commerce and commercialisation of the streaming video operator’s intellectual property assets.

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Bilibili recently started a pilot programme for paid courses on its platform to further monetise its operations. For example, an instructional course on using Adobe Premiere Pro to edit videos costs 99 yuan (US$14.16) for 15 classes. The firm, which remains unprofitable, has mobile games, live broadcasting, so-called value-added services and online advertising as its main revenue drivers.

“They’ll need to bring in more users to [help] dilute the expenses in operations as well as research and development,” industry analyst Zhang said.

To be sure, average monthly active users for Bilibili have been on the rise. It had 110.4 million in the second quarter, up 30 per cent from a year ago. Quarterly net additions in monthly active users reached 9 million, the highest level since 2017, according to a report by Jefferies in August.

Bilibili has also positioned itself as the online entertainment platform for young people in China, which means it features local content that resonates with this consumer market segment. While iQiyi, Youku and Tencent Video have dedicated vast resousrces on licensed video from major film studios and other commercial content providers, Bilibili has its own community of content creators called “uploaders” who have helped to closely engage its target audience.

“Now we have more than 730,000 active uploaders, who contribute 2.08 million original videos each month,” the Bilibili spokeswoman said.

Videos from the Huanong Brothers, for example, have generated 520 million views and 4.4 million followers. Farmers Liu Suliang and Hu Yueqing, from the landlocked province of Jiangxi in eastern China, upload videos about bamboo rat breeding and rural life in China. On the bullet comments their videos receive, the Huanong Brothers said: “It’s fun and that’s why it is special. Some of our videos have 100,000 bullet comments.”

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