In the modern Chinese internet sector, the ability to make money and support a family is the key to every company’s survival. Bilibili (B站) is actively striving to demonstrate that it is indeed a company capable of making money. With the release of its fourth-quarter and annual financial statements for 2023, Bilibili has shown a positive financial state. The total annual revenue for the year 2023 reached an astonishing 22.53 billion yuan, with the fourth-quarter revenue alone reaching 6.35 billion yuan.
Of particular note is that in 2023, Bilibili’s gross profit saw a year-over-year increase of 41%, reaching 5.4 billion yuan, with the gross profit margin in the fourth quarter rising to 26.1%. This marks the sixth consecutive quarter of increasing gross margin, a trend that not only demonstrates the successful validation of Bilibili’s financial model through business operations, but also indicates that its management practices are gradually transitioning toward healthiness.
Driven by this series of positive factors, Bilibili achieved a positive operational cash flow for the first time in 2023. This signifies that Bilibili’s financial structure is becoming increasingly stable, allowing it to break away from dependence on financing and sustain its operations through continual financial input. This transformation also provides a capital foundation for further investment in innovation within the company. Bilibili’s users happily refer to this, saying it signifies “the little broken site has finally made it ashore.”
Bilibili’s next goal is to achieve positive growth in operating profit. During the financial earnings call, Bilibili’s chairman and CEO Chen Rui set out two important objectives for 2024: first, the company will continue to enhance its commercial capabilities with the aim of achieving positive growth in operating profit by the third quarter of 2024, and to commence a profit model; second, to ensure the healthy development of the content ecosystem while assuring profitability, maintaining an excellent reputation and brand influence in terms of high-quality content.
The commercialization of a community ecosystem company should not be limited to a single dimension, but rather involve all-round development. It should not only be about profit growth for the platform but also about increasing the income of creators without solely relying on live-streaming sales or a few top-tier UP masters and major broadcasters. A healthily developing content ecosystem needs equally healthy commercial support.
Facing numerous competitors and intense competition in the online advertising market, Bilibili continues to demonstrate strength in this field and win more market shares. This benefits from Bilibili’s unique user base primarily comprised of young people, an advantage that enables Bilibili to attract more users and consumption for a multitude of new game public tests, such as “Yuan Meng Zhi Xing” and “Shao Nv Qian Xian 2”. Consequently, since the fourth quarter of last year and into the first quarter of this year, Bilibili’s stock price in the Hong Kong Stock Market has also shown an upward trend of about 20%.
Bilibili’s strengths are not limited to traditional fields such as ACG, digital, and knowledge but have also increased support in more categories such as maternity, baby, and home decoration, which is undoubtedly a reflection of Bilibili’s effort to maintain and promote the healthy development of its content ecosystem.
Famed among Bilibili’s top hundred UP masters, “Ying Shi Jue Feng” recently released a video: “8 million followers, how do we handle commercial video orders on Bilibili?”. The video has nearly reached 3 million views, and in this fascinating piece of work, UP master Ying Shi Jue Feng honestly shares their experiences in receiving commercial orders and executing the entire process, a case study that is extremely rare among major UP masters.
What makes the video even more intriguing is that it’s itself a commercial creative collaboration sponsored by the home appliance brand Lifan. This well-planned campaign gained massive recognition from audiences, with many leaving comments under the video such as “Instant Hit”, “Impressive”, “Awesome” in the form of bullet comments, showing a warm response from the viewers. “Instant Hit” is a unique identifier created by Tim, the person in charge of Video Tornado, to reveal to fans that the video contains commercial cooperation. This straightforward and playful method is not only beloved by the wide audience but has also become a typical case of tacit communication between the creator and the viewers regarding commercial collaborations.
As the host platform, Bilibili actively encourages such high-quality and interesting commercialized content and has included the collaboration between Video Tornado and Lifan in its weekly must-watch series, episode 258. This highlights Bilibili’s clear support when the content is engaging enough. With the continued consolidation of advertising infrastructure, Bilibili’s advertising revenue in the fourth quarter of 2023 grew by 28%, reaching 1.9 billion RMB, and showed an accelerating development trend. Bilibili’s COO Li Ni emphasized during the financial report conference call, “In the fourth quarter, the deep conversion budget for advertisements accounted for over 30% of total performance advertising.”
In addition to collaborating with companies for commercial orders, Bilibili creators have multiple monetization methods. The highly-followed creator “-LKs-” also contributed a significant work, “How Much Can the Highest-Earning Channel on Bilibili Make in a Year?”. In this work, -LKs- analyzes the commercial income of Bilibili creators from various dimensions including commercial orders, incentive programs, reward-based sales, live streaming, and charging, among other revenue channels. According to the incomplete statistics by -LKs-, there are over twenty Bilibili creators whose annual income reaches tens of millions, and the top 100 creators earn at least 4 million per year, with the highest surpassing 60 million. The data also reveals that even if the number of fans is not very high, some creators’ income still stands out impressively. Interestingly, creators who rely on commercial orders and reward-based sales often have a higher income ceiling, while the income distribution among the top 100 from live streaming is more balanced. Creators also achieve millionaire-level annual income through selling courses and planning workshops, which sometimes even have a better cost-effectiveness ratio than advertising. For different types of creators, income methods such as incentives and charging are also very attractive, without the necessity to grow a fan base first before monetizing through advertising. As Bilibili CEO Chen Rui affirmed in a meeting, the sense of achievement that creators get from selling courses on Bilibili often exceeds that from advertising revenue.
Providing value-added services is a positive and healthy experience for the entire community. During the peak e-commerce season in the fourth quarter, an average of over 60,000 Bilibili creators participated in selling products daily. During this period, a creator focused on home renovation achieved a total transaction volume exceeding 1.6 billion during the “Double Eleven” shopping event. Meanwhile, a female fashion creator broke through 50 million in transaction volume in a single live-stream sales event in December.
This phenomenon reflects Bilibili’s unique advantage in preselling consumer goods, especially when combined with the platform’s longer video content and in-depth review model. Importantly, the candid attitude of some top UP hosts towards money could inspire those who are still hesitant or unsure how to begin, by demonstrating a willingness to talk about money and the right way to monetize, creating a positive effect.
As a platform primarily targeted at young users, Bilibili has gone through 15 years of growth. Unlike many platforms that have grown rapidly due to capital injection, Bilibili’s growth appears more organic and gradual. In this process, the platform has not only maintained the community atmosphere established over the years but also provided monetization avenues for content creators. In this respect, both “love” and “electricity” (power) are indispensable.
For UP hosts, actively seeking monetization methods is necessary in the face of increasingly tight advertising budgets. Monetization is not limited to gaining more fans and selling ads; live-streaming goods is not the only way to monetize. Entering 2023, Bilibili has officially started to provide sources of income for its over three million UP hosts. Looking ahead to 2024, Bilibili is making steady progress towards its goal of achieving quarterly profitability. In this process, only with more UP hosts being able to profit, can this “flywheel” of growth be fully energized and continue to spin.
