Visual China.
Text |1,200 words.Is it important for Bilibili that the number of daily active users DAU exceeded 100 million in the third quarter?Very important.
In the revenue structure of station B, membership income and live broadcast income are combined into "value-added services", accounting for the first place. But if you take it apart, the advertising business has taken the top spot in a single revenue project. The positive operating cash flow of station B at this time is also the embodiment of the growth results of the high gross margin business.
What's more, in the eyes of advertisers, there is an essential difference between tens of millions of DAUs and 100 million DAUs in terms of the perception of advertising value. Since the "out of the circle" strategy jumped out of the comfort zone, Station B has officially "established" in the commercial realization of advertising, which is a high gross profit margin, and the logic has run through. Isn't YouTube what it does?
Next, it depends on the sustainability of the traffic value of station BThis is also the focus of the analysis. After all, it has invested billions of dollars in attracting new customers and brand building in the past two yearsAfter all, an increase in ads can impact the user experience, and a load balance needs to be found.
According to QuestMobile's monitoring of the average daily usage time of ***APP (excluding short**) in September, Bilibili is the longest time consumption among these platforms, with an average of 1Soak on it for 66 hours. This is in line with the data disclosed in the Q3 financial report, which increased the average daily usage time of users to 100 minutes for the first time in the quarter, hitting a record high.
The increase in time spent combined with a 14% year-over-year increase in DAU resulted in a 19% year-over-year increase in total time spent by users.
On the one hand, it is driven by the time-killing content of live broadcasts, animations and o**, and the other is the gradual development of active search behavior. Platforms such as Bilibili and Xiaohongshu are becoming a powerful supplement to traditional search engines, and even surpass traditional search engines in the Xi of some users, because their KOL content can provide more decision-making reference, whether they want to read car reviews or buy milk powder.
This shows that the stickiness of station B is increasing. The data used to reflect this phenomenon DAU MAU exceeded 30% for the first time in Q3, which means that among the users who open station B more than once in a month, an average of 30% of them want to open it every day.
So how did this come about?The following figure uses historical financial report data to illustrate the relationship between the number of users of Bilibili (unit: 100 million) and the marketing expense ratio (the total revenue of marketing expenditure after excluding equity incentives and other items).
It can be seen that under the strategy of reducing costs and increasing efficiency, the company's marketing expense rate has been on a downward trend in recent quarters, and in fact, as early as the first quarter of 2022, marketing has been tightened. DAU, on the other hand, has been growing steadily and has not been affected by changes in marketing delivery.
This shows that the number of users of Bilibili, especially those who log in to the App every day, has formed a natural growth trend. Looking back, thanks to the more aggressive marketing strategy adopted by Station B after the second listing on the Hong Kong Stock Exchange, a large number of users were circled at the end of the Internet environment when it was about to enter this round of upward momentum, so that these MAUs are now slowly transformed into DAUs with higher viscosity.
In response to the question of whether the company will increase investment in customer acquisition in the future, Chen Rui, chairman of station B, replied at the financial report analyst meeting that the product is done, and its users should become bigger and bigger, rather than relying on increasing customer acquisition investment, and marketing investment will have a strict ROI assessment. The increase in the number of users will drive the creator group to be active, and part of the revenue such as advertising and live broadcast will be distributed to creators to monetize to serve a better content ecosystem. Now it has run through the positive cycle from user scale growth to business growth.
On Wednesday night, Pinduoduo's ** value once surpassed Alibaba, which means that the readjustment of the domestic e-commerce pattern will also bring more fierce competition and marketing delivery. In the past two years, Pinduoduo has been a major advertiser of the main business order advertising of station B, and the Spark plan of station B is a promotion cooperation with the ** alliance. According to the latest disclosure from the management of station B, the advertising revenue created by the Spark plan during the double 11 period was 6During the 18th period, it increased by 160%, and more than 70 cooperative brands were established, bringing more new customers to merchants. At present, this model has also continued to the cooperation with JD.com, and the two sides have launched the "Jinghuo Project" during the Double 11 period.
At present, station B is not very suitable for the formation of a chain-type heavy asset model e-commerce, it adopts a "big open loop" e-commerce cooperation strategy that is different from other players in the market, but it is more suitable for its own endowment, and the model is lighter. The large open-loop strategy also provides a flexible platform choice for the live broadcast with the UP owner, and during the double 11 period, the cumulative GMV of the home improvement UP master "MR Mi Gaze" live broadcast with goods reached 16800 million yuan, a year-on-year increase of 400%. Home decoration belongs to the field of high customer unit price and decision-making, and bringing goods tests the trust of fans, so it is only in the middle and long ** that the fan relationship is more private and the B station UP master has emerged in the subdivision track.
According to management, advertising revenue from e-commerce customers increased by 90% year-on-year in Q3. This should be the fastest vertical category in the 21% year-on-year growth rate of overall advertising revenue of station B.
In addition, in the field of game advertising, according to industry monitoring, with the normalization of game versions in the first half of this year, new games have been launched one after another, and the entire game purchase marketing industry has shown signs of accelerated recovery, and the number of marketing products in Q3 has increased significantly. In this context, the popularity of the live game of station B and the improvement of the performance of e-sports events, as well as the integrated operation of the game and the live broadcast, will help its game advertising. Games and e-commerce are the top two customers in its current advertising revenue, and potential customers are automobiles, digital, mother and baby, etc.
Here you can refer to the performance of Tencent's ** number advertisement. Tencent's Q3 overall online advertising year-on-year growth rate is 20%, compared with the decline a year ago, there have been signs of recovery, Tencent's ** advertising is still sluggish, the main driving factor is the ** number of information flow advertising. Q3 WeChat's "pan-internal circulation advertising revenue", including advertisements with Mini Programs, ** Accounts, and **WeChat Work as landing pages, increased by more than 30% year-on-year, contributing half of WeChat's advertising revenue. At present, Station B is similar to WeChat**, and it is relatively restrained in terms of advertising load, and it still retains room for expansion.
In the short term, Station B reduced operating expenses by reducing marketing investment (down 19% year-on-year in Q3), adjusting the personnel structure to reduce R&D personnel costs (down 6% year-on-year in Q3), and controlling the level of equity incentives, so as to achieve a 40% year-on-year narrowing of operating losses in Q3 to a single-quarter operating loss of 1.1 billion yuan. R&D expenses are expected to continue to decline in 2024 due to the adjustment of the business structure. However, in the long run, the realization of breakeven mainly depends on the improvement of gross profit margin.
The overall gross profit margin of station B in Q3 was 25%, compared with 18 in the same period last year2%, an increase from the previous quarter for five consecutive quarters, and the cost optimization effect has been significant in the past year. Due to the multi-business revenue model adopted by Station B, its cost structure is relatively complex, and compared with mature commercial companies, the current gross profit margin level still has a lot of room for improvement. **In the category, the gross profit margin of Tencent's online advertising division, Mango TV, Netflix, and YouTube is about 40%-50%. Of course, this level is low compared with the gross profit margin of social advertising platforms such as Facebook and Instagram.
This is also why the growth of advertising business has important long-term value for the gross profit margin and commercialization of station B. Revenue sharing with creators, livestreamers, and game developers is the largest part of its existing cost structure, and it doesn't seem to be seeing a downward trend in the near term. Part of the reason is that Bilibili has adopted a support strategy of low commission or even zero commission during the growth period of the two businesses of advertising and live broadcast (tipping and bringing goods), but as the business matures, the monetization rate of this part will be increased for a reason.
The second part of the cost is the investment in self-made content and copyrighted content (attributable to intangible assets), and the direct corresponding revenue item is paid membership. The company's regulation of this part of the cost proportion is relatively more flexible. From the balance sheet, it can be seen that since the beginning of the year, the production cost of station B has remained stable and rising, and the net intangible assets have shrunk slightly. Compared with the introduction of dramas, Station B has invested more energy in self-made national animation. It adopts a high-quality strategy, and gave a list of 68 works at the 6th Guochuang Animation Conference held in September this year, including the upcoming popular work "China Strange Tan Season 2".
In addition, IP derivatives belong to the self-operated e-commerce part, and the subsequent proportion trend is related to the direction of the company's business adjustment, which needs to be observed.
To sum up, it can be seen that, as Chen Rui said, 100 million DAU is a new beginning, and it is predictable and sustainable for Station B to concentrate on doing a good job in ** and natural growth of users, relying on advertising to improve gross profit margin, increase overall revenue and further reduce losses. The advertising revenue in the first nine months was about 4.5 billion yuan, and it is speculated that the annual advertising revenue range may be 6.5 billion to 7 billion yuan based on the performance of Double 11. In addition, the company has achieved positive operating cash flow in Q3 and expects to remain positive in Q4. This is one of the prerequisites for achieving overall breakeven.
The business model of station B determines that it will not be like a long-term platform, and its content mainly depends on the UP master, which is the core cost advantage compared to the long-term platform. In the past, it was often ridiculed for "generating electricity for love", but when it crossed the threshold of a larger platform, it needed to straighten out the path of creator monetization, and operate with a more standardized and industrialized input-output logic, so that up owners can make money, and the commercialization prospects will be clearer.