Who still believes in generating electricity with love?
author | Zheng Yue
editor | Zheng Xuan
Bilibili, which has been running blindly for the past two years, has finally reached the time to stop and think about making money.
On March 3, B station released its 2021 Q4 and full-year financial report. For the whole year, Bilibili's total revenue in 2021 reached 19.38 billion yuan, a year-on-year increase of 62%. At the same time, its net loss also hit a new high, reaching 6.8 billion yuan, a year-on-year increase of 119%.
Among the four major sectors, only the advertising business performed well. Total revenue in Q4 2021 was 5.78 billion, and advertising business increased by 120% year-on-year. The growth of the game business continues to be sluggish, and the previously anticipated live broadcast and value-added services, e-commerce and others have all slowed down significantly.
However, in the financial report conference call, CEO Chen Rui and CFO Fan Xin were very confident and passionate about achieving "narrowing of losses in 2022 and breakeven in 2024."
01 Increased revenue only through advertising
On August 19, 2021, in a conference call after the release of the second quarter financial report, Station B CFO Fan Xin said, "Our focus is to continue to increase the number of users, rather than first achieving balance of payments."
In just over half a year, on March 3, 2022, during the conference call for the fourth quarter and full-year financial report of 2021, Fan Xin established a "breakeven" military order. He said that Bilibili is confident that will narrow its losses in 2022 and break even in 2024 by reducing costs and increasing efficiency while maintaining healthy user growth.
Site B CEO Chen Rui also said at the meeting, "In the past, Site B's energy allocation for user growth and revenue growth was 70-30, but this year it will be 50-50. The more important task in 2022 is to increase revenue."
At this time, the report card held by Station B, which is drawing the big pie, is still a report card of high growth and continued expansion of losses.
’s financial report shows that Station B achieved total revenue of 19.384 billion yuan in fiscal year 2021, a year-on-year increase of 61.54%. At the same time, Station B’s adjusted net loss was 5.5 billion yuan, which was 1.1 times larger than the adjusted net loss of 2.6 billion yuan in 2020.
In the fourth quarter, Bilibili achieved a total net revenue of 5.781 billion yuan, a year-on-year increase of 51%, lagging behind the overall growth for the year. Adjusted net loss was 1.660 billion yuan, compared with an adjusted net loss of 692 million yuan a year earlier. Net losses expanded by about 140% year-over-year.
’s focus has shifted from user growth to revenue growth. Behind this is the change in Bilibili’s revenue structure - weak games, slowing growth in value-added services, declining e-commerce, but advertising has surged against the trend.
The weakness in gaming has continued throughout 2021. In the earnings call for the second quarter of 2021, Chen Rui attributed the slowdown in game growth to “there are too few games with licenses on the market, resulting in the supply of our games being lower than expected. Or intermodal transport." On February 21, "Science and Technology Innovation Board Daily" quoted people in the game industry as saying, "The biggest disadvantage is that the country does not issue version number this year." Today, this problem has not changed, and even in the eyes of many people, this is the main reason why Bilibili’s stock still plummeted after this good financial performance.
However, Bilibili has long known the truth that “eggs cannot be put in the same basket”. It’s hard to imagine how the game business could support half of Bilibili if it performed like this a few years ago. At that time, it was considered to have an "unbalanced revenue structure" and was even regarded as the B station of a gaming company. Now it has achieved diversified revenue and "walks on many legs", but each "leg" is not strong yet.
’s 2021 financial report shows that among the four businesses, live broadcast and value-added services accounted for the largest revenue, accounting for 32.8%, advertising business ranked second, accounting for 27.5%, and the game business’s contribution to total revenue continued to decline, accounting for 27.5%. 22.4%, falling to third place for the first time.
Value-added services (live streaming, VIP membership, etc.) became the largest source of revenue for Bilibili in the fourth quarter. Revenue from this segment increased by 52% year-on-year to 1.89 billion yuan. It is in a stable growth trend, but compared with 95% of the previous quarter. The growth rate has declined significantly compared with the previous month, and negative growth has also appeared for the first time month-on-month.
E-commerce and other businesses are the key expansion businesses of Station B in 2021 - opening a small yellow car and testing live broadcast e-commerce. The growth rate in the first three quarters was astonishing, but also continued to decline, reaching 230%, 195%, and 78% respectively, and fell directly to 35% in Q4. However, revenue has also reached 1 billion yuan. Based on the high consumption power of the second dimension, Bilibili’s e-commerce imagination still exists.
finally talked about the dazzling advertising revenue. The financial report shows that the advertising business revenue of station B in the fourth quarter of 2021 was 1.59 billion yuan, a year-on-year increase of 120%. For the full year, advertising business revenue reached 4.52 billion yuan, a year-on-year increase of 145%. Fan Xin revealed that e-commerce, games, 3C, food and automobiles are the top five advertising categories at Bilibili, and revenue in the advertising field will double within 3 years.
is said to be outstanding because during the current "Internet winter", the advertising business of other Internet giants is in a sluggish state. Although the advertising business base of Bilibili is small, its revenue growth rate of more than 100% is still bucking the trend. But in this winter of Internet advertising, how long can Station B, which insists on not doing pre-roll ads to "generate electricity for love", buck the trend?
02 How to break even in two years? The "big pie" deadline for
to achieve breakeven is 2024. In two years, while Station B is working hard to increase revenue, it also has to work hard to reduce expenditures.
In fact, just two days before Bilibili released its financial report, on March 1, after the release of iQiyi 2021Q4 and 2021 full-year financial reports, iQiyi CEO Gong Yu stated that it would achieve non-GAAP (recognized ) as early as possible throughout the year. Accounting standards ) Breakeven at the operating level.
This time, Station B also gave a clear time expectation to achieve breakeven. Fan Xin, CFO of Bilibili, said, "We are confident that on the premise of maintaining healthy user growth, by increasing the monetization rate of a single MAU and controlling operating expenses, we can achieve a year-on-year non-GAAP operating loss rate narrowing in 2022. The mid-term goal is Achieve non-GAAP breakeven in 2024. "
Looking at the expenses of Bilibili in 2021, the total operating expenses will be 10.5 billion yuan, a year-on-year increase of 75%. Among them, operating and selling expenses are the largest, accounting for 55%. This expenditure was 1.762 billion yuan in Q4, a year-on-year increase of 73%, which was the largest increase in the quarter.
Faced with such a large expenditure, Fan Xin gave detailed ways to reduce expenditures - actively manage operating expenses, reduce R&D expenses, pay attention to return on investment , and control the number of personnel. What's clear is that it won't be easy to maintain healthy user growth as these expenditures are reduced.
In 2020 and 2021, with high investment in marketing expenses, the user data of Station B performed well. In the fourth quarter of 2021, Bilibili’s monthly active users reached 272 million, and its mobile monthly active users reached 252 million. At the same time, the number of official members of Bilibili reached 145 million. In the past February, the number of monthly active users of the B website exceeded 300 million. Chen Rui said in the earnings call: "We are still confident to achieve the goal of 400 million monthly active users in 2023."
However, when Internet traffic peaked, the cost of acquiring users continued to increase and competition became increasingly fierce. After reducing marketing expenses, It is not easy for Bilibili to maintain the user growth rate of the past two years.
After all, today’s rivals competing with Station B for user time are not the declining Station A, or even Aiyouteng, but the three short video giants – , Douyin, , Kuaishou, and Video Account. Taking Bilibili and Kuaishou as examples, the average daily usage time of users of Bilibili in 2021Q4 was 82 minutes, and the average daily usage time of users of Kuaishou in 2021Q3 was 119.1 minutes, which is more than half an hour longer than the average daily usage time of users of Bilibili.
R&D expenses are mainly used for personnel costs related to developing new games, enhancing data capabilities and optimizing new product functions. Reducing this part of the expenditure is aimed at underperforming game R&D. Firstly, Bilibili has not been able to prove the full strength of its self-developed games. Secondly, in the context of tightening regulation in the game industry, it is natural to reduce game research and development expenditures.
Controlling the number of personnel is also a common method used by large factories to survive the winter. During the conference call, Chen Rui mentioned that the increase in the number of employees in 2022 will be very limited.Although
is sending out signals to reduce expenditures everywhere, the pie is still growing bigger - a gross profit margin of 30% will be achieved simultaneously with the breakeven. Fan Xin said, "The gross profit margin is expected to be around 19-20% for the whole year of 2022, with a trend of first low and then high throughout the year. In the next three years, with the improvement of liquidity, the overall gross profit margin will improve towards 30%. 》
03 The contradiction between business and content ecology
Content ecology has always been what Station B is most proud of. "Station B may go bankrupt, but it will never deteriorate." Chen Rui's answer on Zhihu in 2016 proves how much Station B cares about the ecology. But later some netizens ridiculed, "He seems to have said the opposite. It should be 'Bilibili B may deteriorate, but it will never go bankrupt.'" Bilibili has always been a contradiction between business and content, and its financial reports have repeatedly failed. Confirm.
"Power for love" has always been the slogan of Bilibili's community ecology, but the 2021 financial report with such eye-catching advertising performance indicates that only "recharge for love" is not enough, it also needs a "financier". The
B site has kept its promise for many years and will not add pre-roll ads to its videos. Regardless of "Aiyouteng", Douyin, Kuaishou, or overseas YouTube, advertising is the bulk of revenue. Bilibili, which now relies more and more on advertising, can achieve breakeven without posting or "deteriorating". Of course, users are happy to see it.
But it is not easy to do this. Without pre-roll advertising, you will lose more than advertising costs, and you will not be able to link pre-roll advertising with membership rights. Among the member rights of "Aiyouteng" and YouTube, skipping ads and viewing content first are important members' rights. The lack of the value of these rights will naturally reduce the subscription conversion of Station B.
The membership rights of site B are not too strong. Except for some member content and enhanced audio-visual effects, there is little difference in experience between whether you are a "precious" member of site B or not.
’s commitment to not adding patches and the vast user-friendly membership rights. Although it is impossible to calculate how much user retention these have brought to Bilibili and how many casual opportunities it has lost, Bilibili should always be thinking and measuring. Once user growth stagnates, it will be even more difficult to follow the old "Aiyouteng" path of using membership rights to attract existing users. The
B website does not stick to "love" without considering business. Chen Rui also said in 2020 that "small beauty and development and growth cannot coexist." Bilibili, which has tried its best to break out of the circle, has very successful cases, such as the New Year's Eve Party, " After Wave ", "Enter the Sea"... Users surged, the crowd generalized, and after efforts to "break the circle" developed and expanded, content and business emerged again Conflicts inevitably impact community culture.
In terms of content management, there are occasional cases of out-of-control cases. LexBurner, PaperClip, Witty Party Girl, Wizard Finance and other leading UP owners of Bilibili have frequently overturned due to various remarks and actions in recent years. For Bilibili, content control issues directly affect its user retention and will also damage its overall community image. How to maintain the quality of the overall content is a challenge Bilibili faces.
However, behind the review and control of content, more manpower investment is required. This part of the work falls on the "auditors", which ultimately falls on the organizational management issues of Station B.
After the Spring Festival holiday, the figure of the "auditor" emerged from behind the video in the field of public opinion. At noon on February 7, a piece of news spread quickly about the sudden death of the Wuhan audit team leader at Station B who was suspected of working overtime. According to the news, "The leader of the Wuhan AI audit team at Station B was required to work overtime during the Chinese New Year. Under the intensity of work from 9 pm to 9 am, he died suddenly of cerebral hemorrhage in the early morning of the fifth day of the lunar new year." The website
B responded that after internal attendance verification, the employee went to and from get off work normally according to the work plan. The working hours were 9:30-18:30, with five days off and two days off. There was no overtime work in the week before the incident. Station B also stated that it will increase the number of recruitment and review employees by 1,000 in 2022 to reduce per capita work pressure. At the same time, we will pay more attention to the physical health of our employees. The break-even point for
will be two years later. The balance between business and content, development and responsibility is a lifelong issue for a commercial content community.
*Header picture source: A certain scientific electromagnetic gun, the picture in the text comes from the official WeChat account of B station
