Ignition Dimension (ID: chaintruth) original
Produced by Burning Finance
Author | Lü Jingzhi
Edited by | Rao Xiafei
On March 3, Beijing time, Bilibili (NASDAQ: BILI, HKEX: 9626; hereinafter referred to as "Station B") announced its unaudited financial reports for the fourth quarter and full year ended December 31, 2021.
According to the financial report, the total revenue of Station B in fiscal 2021 reached 19.38 billion yuan (RMB, the same as if noted below), an increase of 62% year-on-year. Among them, the fourth quarter revenue increased by 51% year-on-year to 5.78 billion yuan.
Under U.S. GAAP, Station B had a net loss of RMB2.095 billion in the fourth quarter and a net loss of RMB1.66 billion for non-GAAP adjusted non-GAAP. The net loss for the whole year was 6.809 billion yuan, compared with the net loss of 3.054 billion yuan last year, and the loss margin expanded by 122.95%.
Affected by the widening loss, the stock price of Station B fell 7.89% at the close of trading at $27.78. Compared with $113.89 / share at the beginning of 2021, the stock price of Station B has fallen by nearly 80%. As of the close of us stocks on March 4, Beijing time, the total market value of Station B was 10.68 billion US dollars (67.52 billion yuan).
For the fluctuation of the stock price, Station B said in the earnings meeting, "this has also alleviated the internal volume of the industry to some extent.".
Judging from this quarter's financial report data, B station has had both joys and worries in the past year. In the absence of growth potential in the game, other businesses of Station B began to exert strength. In this quarter, the advertising revenue of Station B surpassed the game revenue for the first time, achieving 1.59 billion yuan, becoming the second main force in total revenue with 28% of total revenue.
In this quarter, the first main force of Station B's revenue is still value-added services (mainly composed of members and live broadcast revenue), with revenue of 1.89 billion yuan in the quarter, accounting for 33% of total revenue.
Game revenue and e-commerce revenue in the quarter were 1.3 billion yuan and 1 billion yuan, accounting for 22% and 17% of total revenue.
In terms of annual revenue distribution, value-added services, games, advertising and e-commerce were 6.935 billion yuan, 5.091 billion yuan, 4.523 billion yuan and 2.835 billion yuan respectively, accounting for 35.78%, 26.27%, 23.33% and 14.63% of the total revenue.
Another piece of good news is that Station B announced that the board of directors has approved the share repurchase program. Station B will repurchase up to $500 million of American Depositary Shares (ADS) over the next 24 months. In addition, The Company's Chairman and Chief Executive Officer, Rui Chen, announced that it intends to use his personal funds to purchase American Depositary Shares (ADS) with a total amount not exceeding $10 million in the open market over the next 24 months.
The buyback move is a testament to management's confidence in the company's prospects. That confidence can also be felt on this quarter's earnings call.
In the conference call, Station B said that in the past year, the leverage of market fees has increased, which is clearly manifested in the quarter's MAU (average monthly active users) increased by 35% year-on-year to 272 million. Among them, paid users increased by 37% year-on-year, which has surpassed the growth of active users. In the future, Station B is confident of further increasing the leverage of market fees.
Moreover, Station B said that it will achieve a total revenue of 5.3-5.5 billion yuan in the first quarter of 2022, 400 million MAU in 2023, and a revenue balance in 2024.
However, behind a piece of positive data, there is also a problem that B station cannot avoid: game revenue can no longer become the main force of B station growth. In the face of strong short video opponents and the natural "circle-breaking" problem, the B station, which is getting farther and farther away from profit, urgently needs a surprise.
Station B, lose the game circle
Station B, which started as a game business, has obviously lacked stamina.
Looking at the performance of B station games in 2021 alone, from the first quarter to the fourth quarter, the game revenue was 1.171 billion yuan, 1.233 billion yuan, 1.392 billion yuan and 1.3 billion yuan, with an increase of 1.73%, -1.20%, 9.18% and 15% respectively.
Even with the release of new works such as "Mobile Suit: Fusion" and "Sword Art Online Black Swordsman: Ace" in the second quarter of 2021, the launch of 3 exclusive agent games in the third quarter, and the blessing of the fifth anniversary celebration of "Destiny: Crown Designation", the B station game can only barely break through the growth of the number of units in the fourth quarter.
Data Source/Bilibili Financial Report Burning Financial Charting
In the case of weak game growth, other businesses of Station B have begun to surpass the fourth quarter of 2020, and the value-added service revenue of Station B surpassed the revenue of game revenue of 1.130 billion yuan with 1.247 billion yuan, becoming the main force of the total revenue of Station B for the first time.
In the four quarters of 2021, value-added services accounted for 38.35%, 36.37%, 36.70% and 33% of total revenue, respectively, compared with games accounting for 30.02%, 27.43%, 26.76% and 22% of total revenue.
Moreover, in the quarter, advertising revenue also achieved a counter-increase in game revenue at 28% of total revenue.
In fact, Station B's calculation of "Little Tencent" shows signs of collapse in 2018.
From March to December 2018, the game version number was suspended, and the imported game version number was not restored until March 2019. At the same time, the growth of the secondary yuan market has also shown an inflection point.
According to iResearch statistics, in 2018, the growth rate of pan-secondary user scale fell by 2% to 12.9% compared with the 14.8% growth rate in 2017, and the growth rate of market size continued to slow down, and it is expected that the growth rate of market size will slow down to 4.2% in 2023.
In the case of the overall market downturn, the developers of the game will first choose to leave the high-quality game copyright to their own release, and if they want to find a third party, they will also tend to cooperate with a big manufacturer such as Tencent.
This blow directly put a sharp brake on Station B, which relies on games to achieve revenue growth.
Since the beginning of 2018, the growth rate of B station game revenue has slowed down significantly. In 2018, 2019 and 2020, the game revenue was 2.936 billion yuan, 3.597 billion yuan and 4.803 billion yuan, respectively, with a year-on-year growth rate of 42.66%, 22.51% and 33.53%, respectively, compared with 501.75% in 2017.
The loss of the game at Station B also seems reasonable. Mr. Wang, a secondary market analyst from GF Hong Kong, told Burning Finance, "Station B caught up with the FGO to release this game in the period of domestic fire, but because of the successful release of one or two games, it overestimated its profitability in the game field." ”
"Game distribution is a profitable business, and the main competitive pressure lies in the early copyright competition, the later operation and technical threshold and the cost are not high. However, once the good resource advantage is lost, the game agent has almost nowhere to go. High-quality games cannot be sent out, and games without quality are also white hair. ”
If the game platform does not go well, it will do the game content. In 2021, Station B did not stop the investment layout in game research and development, and successively invested in companies that had developed "Seven Heroes Q Biography", "High-skilled Hand Group" and "Shepherd's Heart": Game Valley, Heart Light Liumei and Mountain Lily Culture.
On March 2, Interface News reported that Station B invested in Dragon Fist Storm, the developer of Dream Link, with a 4% shareholding ratio.
However, as Mr. Wang said to Burning Finance, "Self-developed games are a gamble that requires great investment but the return is difficult to predict." The explosion of the original god itself is also an accidental popularity of small companies, and even large factories such as Ali and Baidu have no proud results in self-developed games. Tencent, as the base camp of the game, did not dare to throw too much money into it before the original divine fire. Self-developed games are not the equal to success of money and strength, but also the inspiration of luck and genius. ”
Judging from the answer sheet of Station B, the annual game revenue in 2021 was 5.091 billion yuan, an increase of only 6% over 2020, and the investment loss in the quarter was 0.93 billion yuan, and the annual investment loss was 194 million yuan.
Obviously, whether it is by strength or financial resources, the B station game has not yet achieved the ideal "genius" inspiration.
Content breaks the circle to face a new battle
The B station that cannot do "Little Tencent" understands that if it wants to continue to grow, it cannot be limited to game users, so the slogan of breaking the circle has been shouted very loudly in the past.
In fact, in the past few years, Station B has also been working hard in the circle-breaking operation. Through the changes of the top 100 UP masters of station B from 2018 to 2021, it can be seen that the serious tilt of the pan-quadratic up master is gradually decreasing, and the pan-entertainment, life and knowledge CLASS UP masters are increasing year by year.
Among them, the proportion of game area UP masters in the top 100 decreased from 27% in 2018 to 15% in 2021; and the knowledge area UP masters that have not yet appeared in 2018 account for 14% of the top 100 in 2021.
At the same time, the distribution of the top 100 UP masters is from the game area, ghost animal area, and music area to the game, knowledge, music, life, and food.
Source: Search Map Network
In 2021, when the overall growth of the long video platform industry was weak, Station B sniffed a new opportunity to overtake in the corner - documentaries.
At the end of last year, Station B held the first documentary conference, and from the list of films announced, the 21 shortlisted documentaries were divided into three categories.
They are: "Fireworks" series, including the exclusive "Sichuan Flavor 4" and the self-produced "Life String 3"; the "Vientiane" series, including the exclusive "Green Planet" and "The Unsolved Mystery of Science"; the "Human" series, including the exclusive "But There Are Books 2" and "Fraudulent Artists".
On the one hand, the strategy of the main documentary retains the "niche" attribute of the B station, and on the other hand, it does successfully attract some non-secondary users after the 90s.
Born in 1998, Peking University Doctor Xiaokong is a loyal user of the B station documentary, "I like to watch "Life String" when eating, before I only occasionally brushed the game live when I saw the B station, after I was fascinated by "Life String", I found that the B station has a lot of interesting documentaries, and now the B station is the standard for me to eat. ”
In addition to documentaries, Station B also continues to exert efforts on more self-made content.
In 2020, "Rap New Generation" topped the Weibo Variety Awards draft category; the total number of plays of the self-made drama "The Sky of the Wind Dog Boy" exceeded 100 million; the finale was watched online by 100,000 people at the same time, and the total number of bullet screens exceeded 3.2 million.
At the 2021 B station AD TALK (marketing conference), the B station released ten variety shows that will be launched in 2022.
Among the scheduled variety shows, including the "Rap New Generation" and the second-generation variety show of "Post-90s Marriage Agency" that were out of the circle before, as well as the new national style and cute pet variety shows "Song Wanli" and "Non-human Games".
For the rapid MAU offensive of short videos, Station B is counterattacking with the storymode launched last year.
Storymode was actually fully launched last year, but users don't see the difference in the interface. Just in the recommended videos on the home page, you will see videos with a vertical screen and a shorter time.
Station B seems to use long video to break the circle of a video, and is solving the broken circle from the second to third dimensions. In the financial report meeting, Station B said, "Users will choose the content platform through the category, rather than through the length of the video or the display mode of the horizontal and vertical screen." Just like people who like to drink carbonated drinks won't mind that Coke is black and Shichiki is white. ”
The data proves that the video DAU (daily active user) penetration rate in storymode exceeds 20%, and the percentage of likes reaches 30% (data disclosed in conference calls). Therefore, in the face of short videos that occupy more fragmented scenes of users, storymode is expected to become a new form of user growth in the future.
However, is form and length really not a factor in the user's choice of video platform?
B station five user Fei Fei said, "B station in my heart is a fixed label, long video, two video or work and study materials I will come to brush B station, I personally resent seeing short videos on B station, especially a lot of and vibrato are repeated, I might as well brush vibrato." ”
But breaking the circle of this set of volumes, Station B did a few years, it seems to be broken, but not completely broken. The content of the circle has become a problem, and then add a form of circle breaking, this set of volumes, still have to do.
Judging from the results, the broken circle answer sheet of Station B seems to be the most satisfactory in 2020.
In 2018-2019, due to the decline in the quality of game distribution, the average MAU of Battle B increased year-on-year, from 70% in 2017 to 30% range. In 2020, the year-on-year growth rate of MAU will retrace to the 50-60% range.
In the four quarters of 2021, the MAU of Station B was 223 million, 237 million, 267 million and 272 million, respectively. This is up 30%, 38%, 36% and 35% year-on-year compared to the same period last year. Compared with 2020, it has returned to the growth rate of 30%. In terms of active users, compared with the up-and-coming Kuaishou's 533 million (Kuaishou's third quarter 2021 financial report data) and Douyin's 800 million (a number of media report data), it is also slightly inferior.
2020 is also the year when capital has the strongest response to the diversification of Station B. On January 1, 2019, Station B closed at $18.41 per share, and by January 1, 2020, it closed at $21.55 per share, a full-year increase of only 17.06%. On January 1, 2021, the stock price of Station B closed at $113.89 per share, and the stock price rose by 428.49% for the whole year of 2020.
By 2021, whether it is users or capital, it seems that the circle-breaking behavior of Station B is no longer fanatical.
In the future growth, will the advertising "circle" rely on?
Judging from the financial report data of this quarter, the revenue of Station B has a "dark horse" that has not yet been developed.
In July 2020, Station B officially launched the UP main commercial operation platform - Hanabi Platform. According to the disclosure of the B station financial report meeting, at the end of 2021, the Fireworks platform has settled 22,000 UP owners and 4,200 merchants, with a brand repurchase rate of 75%.
Judging from the current data, after the up master commercialization of B station gradually matures in the future, the B station spark platform may become another growth force in advertising revenue.
According to the Longbridge Dolphin Investment Research Report, as of the second quarter of 2021, the Hanabi platform's share of up main advertising revenue is only 6%, which actually greatly reduces the overall advertising revenue and advertising net profit of Station B.
Through a number of practitioners, Burning Finance has learned that the platform service fees of Xiaohongshu, Kuaishou and Zhihu are about 10%, 15% and 40% respectively.
In contrast, the percentage of Station B is low, which can also be reflected in the side, the Fireworks platform has not yet reflected the value of short-term revenue growth for Station B, and more is in the long-term strategic layout, through the standardization of commercialization standards, to maintain one of the most important core assets of Station B - UP Master.
Even so, the advertising revenue of Station B in the four quarters of 2021 was 714 million yuan, 1.049 billion yuan, 1.172 billion yuan and 1.59 billion yuan, respectively, an increase of 233.64%, 200.57%, 110.03% and 120% respectively over the same period last year. The advertising revenue for the whole year of 2021 was 4.523 billion yuan, an increase of 145.55% over 2020.
Data source/B station financial report Burning financial mapping
However, Station B wants to continue to "go out of the circle" by advertising growth, and the road is obstructed and long.
For Station B, it is not an easy task to share the advertisement. In the past, BAT (Baidu, Alibaba, Tencent) dominated the field of display advertising, and then there was Jitter Fast Red in the field of talent advertising.
The good news is, according to QuestMobile's 2021 China Mobile Internet Annual Report. Compared with the negative year-on-year growth of traditional display advertising in 2021, the KOL (Talent) advertising form has gained great recognition in recent years, with a year-on-year increase of 78.1% and 128% in 2020 and 2021, respectively.
Such a trend is undoubtedly good for B stations that promise never to do interstitial advertising and have a large number of high-quality UP masters.
The bad news is that KOL is not only the exclusive resource of B station, Kuaishou and Douyin also have high-quality KOLs. Moreover, according to QuestMobile, in the allocation of Internet user time in 2021, the short video industry occupies the most people's time with a proportion of 25.7%, while other types of online videos account for only 6.3%.
QuestMobile data data shows that in 2021, the single-day use time of Kuaishou and Douyin users is 107.5 minutes and 101.7 minutes, respectively, while in this quarter's financial report, the latest user of Station B is 82 minutes in a single day. For a long time, the user viscosity of B station on the advertising track seems to be shorter than short videos.
In the launch of KOLs, Station B is not the first choice for media managers. Mr. Lu, a media manager in Hangzhou, told Burning Finance, "The first choice for our customers KOLs to put is Xiaohongshu and Douyin, and very few people choose B station. Mainly because, first, the video production cycle of Little Red Book and Douyin is short, so the advertisement can be delivered faster and the cost is relatively low. Second, Xiaohongshu and Douyin themselves are platforms for planting grass and carrying goods, and users' tolerance for advertising is very high, so the conversion rate is also higher. ”
Ms. Li, an advertising manager in Beijing, also said, "The KOL at the waist of Xiaohongshu, the advertisement of a single article in the single article of the food category, and about 8,000 yuan in the beauty category." B station equivalent level of UP master, advertising quotation to 20,000-30,000 yuan. Previously, we contacted a hard technology UP master with 2 million fans, with an offer of 700,000 yuan and a schedule of at least one month. It wasn't long before the UP lord was banned for saying the wrong thing, but fortunately didn't spend the money unjustly. ”
Moreover, even if the advertising business is achieving substantial growth, it needs to be faced that the advertising revenue base of Station B is very small. In the third quarter of 2021, the advertising revenue of Station B was 1.172 billion yuan, half of Tencent's advertising revenue of 2.25 billion yuan in the same period, and one-tenth of The online marketing service of Kuaishou (mainly composed of advertising services and Kuaishou vermicelli) of 10.9 billion yuan.
In addition, according to QuestMobile, after the peak of China's Internet advertising market growth of 54.6% in the first quarter of 2021, the market growth began to show a downward trend, with market growth of 19.6%, 9.5% and 12.7% in the next three quarters of 2021, respectively.
Under the double attack of the overall market growth slowdown and the obvious advantages of competitors, B station advertising can not only be faster than themselves, but also better than others.
In the communication with a number of analysts (including games, e-commerce, video and Internet fields), the industry's optimism and bearishness of B station, although they have different opinions, are surprisingly consistent in one point of view: the core value of B station is to have a high viscosity of Z generation users, but how to use it to monetize, B station did not think well.
In the next stage, rather than "going out of the circle", station B needs more "brilliant".
Resources:
Witness History! TikTok US-UK average monthly usage time per user super YouTube Source: Game Gyro;
"From 2018 to 2021, behind the top 100 changes in Station B" Source: Sotu.com;
"The Sky of the Wind Dog Boy" ended in a record" Source: Chinese New Information;
"B station has invested in a game company, the keyword is still two-dimensional" Source: Interface News;
*The caption image is from Visual China.
*Disclaimer: In no event shall the information herein or the opinions expressed herein constitute investment advice to any person.