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Is Bilibili the Next YouTube in China?
COVID-19 and China
Image credit: Bilibili website.

Background

BILI is one of the most popular online video platform with idiographic bullet curtain, and it has a complete generalized entertainment business ecology. The purpose of the report is to understand the business of BILIl from an investment perspective. BILI is based on two-dimension content and enriching itself to different contents that promote BILI to build a huge traffic pool with Gen Z as a core. However, confronted with the strategy of breaking circle, community culture is also a barrier of BILI.

In this report...

As content generalizes and the platform continuously breaks its circle, BILI is going towards to becoming YouTube in China. Containing ecology stability and community atmosphere are two key issues when users are rapidly growing in BILI. Breaking the circle also means more competition, but the best core competitiveness of BILI is high-quality PUGV content ecology and a well-managed community atmosphere. In the short term, BILI needs to deal with the direct competition with Xigua Video who also identifies itself as PUGV. In the long term, the positive influence of competition between TikTok and Kuaishou will provide development space for BILI.

Key takeaways

Bulls:

1.BILI has the largest video producer community in China.

2. Incentive system of BILI have had a head start over most of their competitors in China

3. The offline activities and business development connection between BILI and the video producer are tighter.

4. Backed by Ali and Tencent simultaneously, which provides a good investor relationship.

Bears: 

1. BILI finds it hard to break through the ACG cultural circle on which it was originally based.

2. The characteristics of BILI users and the style of contents limit the advertisement business opportunity and further limit the revenue.

3. Fierce competition from BydeDance's ixigua.

We think in essence, competitions for users and time expenditure are dependent on competition of content which is the core competition in PUGC. In the future, there will not be just one platform that can work as YouTube to satisfy the content needs of people in China. For BILI, mastering the time window and continuously reinforcing the advantage of content ecology and community, as well as speeding up the accumulation of users are the core path for it to enhance its competitiveness. From the view of a longer perspective, BILI not just wants to be YouTube in China, but also wants to become a cultural brand company.

Risk tips: User growth slow down, user activity and stickiness decrease, PUGC content ecology is unstable, community atmosphere changes, commercialization progress falls short of expectations, industry competition intensifies, and content regulation risks.

Editor: Luke Sheehan

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