【周读外刊】Billing Billing

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Billing Billing

Billing, Billing

China’sYouTube wants to be its Netflix—and more .

The mission statement of Bilibili, oftendubbed “China’s YouTube”, stands out for its modesty. Instead of promising tochange the world, the firm aspires merely to “enrich the everyday life of younggenerations in China”. If user figures are a guide, the Chinese young feelenriched. In the last quarter of 2020, the number of people who used theservice at least once a month shot up by half from a year earlier, to 202m.Nearly nine in ten were under the age of 35. Videos on the platform, whichrange from sports highlights to self-help lectures and everything in between,attract an average of 1.2bn daily views.

Launchedin 2009 as a website for fans of Japanese anime, Bilibili has evolved into adiversified entertainment group. In recent months even Western musicians (suchas Jessie J and Charlie Puth) and Hollywood stars (including Dwayne Johnson)have rushed to set up Bilibili accounts. Investors, too, have taken notice.Between March 2018, when the firm listed in New York, and February this yearits market capitalisation rose more than ten-fold, to $41bn. On March 23rdit raised $2.6bn in a secondary listing in Hong Kong.

UnlikeYouTube, Bilibili refuses to clutter user-generated videos with adverts. That way,the thinking goes, it can attract new users put off by such interruptions, andconvince them to spend more time on the platform. The central aim, as describedby executives, is to “convert” this “sticky community” into “paying users”.Bilibili does so in two main ways: by offering games where players purchasevirtual items to advance to the next level, and access to original andlicensed films and series. This Netflix-like business, launched in 2018, nowhas 14.5m paying subscribers.

Theshare of users who pay for things like in-game accessories and subscriptionshas risen from 3.9% in 2018 to 8.0% in 2020. Receipts from these sources helpedBilibili nearly to double its revenues in each of the past three years, to 12bnyuan ($1.7bn) in 2020. It also sells adverts on parts of its platform, but theymade up less than fifth of its sales (compared with the vast majority ofYouTube’s).

All this has yet to make any money. Last year Bilibili reported an operating loss of 3bn yuan, double the shortfall in 2019. Profits may remain elusive; the company must invest to maintain a pipeline of addictive games and

pays top dollar to outbid big streamers like iQiyi for the rights to popular movies and shows its nascent subscription business needs.

Bilibili’s executives are sanguine. “As our net revenues continue to grow, we do not expect our total content costs as a percentage of total revenue to substantially increase,” they wrote in the prospectus for the firm’s Hong Kong listing. Its share price, down by a third since its February peak, suggests investors want finally to see some proof.