How does the gaming business, which accounts for 83.4% of Bilibili’s revenue, operate?

Recently, bilibili released its IPO prospectus, and we discovered that this barrage video website, which started out as an 2D video website, has unknowingly completed its transformation and relies on mobile games to support 83.4% of its profits. Everyone sighed: This is a website that relies on games to support its videos. What on earth did Bilibili do to achieve such results?

It is estimated to take 10 minutes to read this article. The overall idea is as follows:

Looking at the business from the financial report of Station B

In terms of revenue, Bilibili's total revenue in 2017 was 2.468 billion yuan, which was composed of four major businesses: games, live streaming , advertising, and membership. Games accounted for 83.4% of the total annual revenue, live streaming accounted for 7.1%, advertising accounted for 6.5%, and membership accounted for about 3%.

Compared with the revenue of 523 million in 2016, the revenue in 2017 increased by 372% year-on-year. Overall, the four major businesses have all grown steadily, among which gaming is the most eye-catching, with a year-on-year increase of 597%.

In terms of content, the five most viewed themes on Bilibili in the fourth quarter of 2017 were: life, games, variety shows, programs, TV, and movies .

At this point, we have to admire that the content community that represents anime, animation, and games in our subconscious has already transformed unknowingly from an access system to an open system, and has successfully integrated videos (PUG+authorization+ short videos ), live broadcasts, blogs, and games into a comprehensive entertainment media platform.

What surprised me most was that, as one of the video websites with the largest animation and documentary libraries in China, Bilibili received an average of 31,400 user-generated videos every day in the fourth quarter of 2017, covering a variety of fields such as animation, games, fashion and technology. Compared with the same period in 2016, user creations increased by 219%.

If we delve deeper into the reasons for the rapid growth of Bilibili's revenue, we will inevitably find that Bilibili's rapid growth mainly comes from the substantial increase in the number of users. The MAU in the fourth quarter of 2016 was 49.4 million, and the average MAU in the fourth quarter of 2017 was 71.8 million, a year-on-year increase of 145%. The average access time and number of visits from almost every device ranked first among online platforms, and the user usage time was as high as 76.3 minutes, which shows the high stickiness.

As Chen Rui, chairman of Bilibili, said, 81.7% (31.6 million) of Bilibili's users were born between 1990 and 2009 (called Generation Z). As the indigenous people of China's Internet , they have benefited from the rapid economic development, and their material conditions and education are generally good. They have strong demands for online entertainment consumption and a sense of payment.

Based on these data, we can construct the most important user characteristics of Bilibili: young users who have consumption needs, are willing to pay, and have high stickiness and high retention .

Inferring operations from B station’s game revenue 

We can find out from the prospectus that the revenue share of Bilibili's gaming business has been increasing from 65.7% in 2015 to 65.4% in 2016 and then to 83.4% in 2017.

What exactly has Bilibili done in the gaming field?

The games on Bilibili mainly include game joint operation , joint distribution, agency distribution, cooperative R&D, and investment in R&D.

Game joint operation was first initiated by Shanda's Chen Tianqiao. It is developed by game manufacturers and jointly operated with specific platforms. After obtaining revenue, both parties share it according to the agreed ratio. Currently, Bilibili is jointly operating 91 games. As a channel platform, Bilibili generally splits the revenue at a ratio of 5:50 as agreed. Since 2013, Bilibili has been operating web games under the name of [Xiangyou Technology], relying on the great success of "Honkai Gakuen 2", and the monthly revenue of the joint operation has reached tens of millions. According to the core data currently available, more than 50% of Android revenue comes from Bilibili, and the overall duration is 3-4 times that of other platforms. It can be said that without Bilibili's joint operation, there would be no success of "Honkai Gakuen 2". Subsequently, the well-known and larger joint operations include "LOVELIVE! School Idol Taboo", "Meluk's Story", and "Blade of the Gods". These games have greatly improved Bilibili's game center business.

In terms of joint distribution, agency distribution, and cooperative research and development, Bilibili has established cooperative relationships with 66 game developers. In 2017, Bilibili evaluated a total of 943 games and launched 55 games in joint operation. ( Data from news)

In terms of investment in R&D, Bilibili has invested in more than 33 game companies, driving its own IP development through joint operations, thus triggering a flywheel effect.

As of December 31, 2017, Bilibili operates 8 exclusive mobile games , 63 jointly operated games, and 1 independently developed mobile game.

How does Bilibili operate games?

How does Bilibili choose games?

Take B station's most famous online role-playing game "Fate/Grand Order" as an example. Once the animation was introduced to B station, it won a total of 180 million views. The over 100 million clicks , barrages, and collections all indicate the animation's super high popularity and large number of people. Based on this, B station exclusively launched the mobile game of the same name "Fate/Grand Order" in China in September 2016, attracting 4.5 million players within 30 days of its launch.

Bilibili analyzes people's videos on the site, and analyzes the two-dimensional videos with high click-through rates, high viewing rates, and high collection rates to confirm whether the type of video has corresponding high popularity, thereby incubating corresponding IP games and recommending them to the corresponding anchors and viewers to trigger them, thus realizing a closed loop of R&D and promotion of discovery - production - precise positioning.

In 2017, Bilibili evaluated 943 game products and finally launched 55 of them, with a pass rate of only 6%. It can also be clearly seen from the prospectus that Bilibili's game revenue mainly comes from "Fate/Grand Order" launched in September 2016 and "Azur Lane" launched in May 2017. In the prospectus, 81% of the game revenue came from games 2017 years ago, and 19% came from new games launched after 2017, which all confirms the correctness of this approach.

How does Bilibili guide users to play games?

If we carefully conduct a mind map analysis of the overall hierarchy of Bilibili, we will be surprised to see that Bilibili's entrance and promotion methods are extremely well established.

【 Multiple direct entrances 】

Bilibili has 9 major category entrances for recommending game videos and as many as 14 secondary entrances. The promotional spots for game live broadcasts and game-related videos account for almost 70% of the major recommendation flows. Whenever there is a list, it is bound to be related to games. The major entrances divert traffic to the games in a clever way without being annoying. Instead, it feels like the categories are diverse. It has to be said that the operation is highly refined.

【 Appointment system and special topics 】

For games that users are interested in, a reservation system is adopted, which is used to gain great first-mover advantage and aggregation effect. Simply put, the more players gather, the greater the benefits they will get.

Taking "Higurashi no Shisan Gakuen" which is about to be launched on Bilibili as an example, 5,000 people who make reservations can get an initial development gift package, 10,000 people who make reservations can get an intermediate upgrade gift package, 50,000 people who make reservations can get a deluxe upgrade gift package, and 150,000 people who make reservations can get additional rewards for drawing physical figures. This strategy naturally leads to players who want to obtain advantageous initial equipment naturally gathering on platforms with more people, and the strong will become stronger.

At the same time, Bilibili’s official website has set up special topics for the game, allowing users to understand the game in multiple ways and then convert them into players.

【 Multi-channel reminder 】

Another point that many application vendors should learn from Bilibili is its independent reminder channel. Different from the push reminders provided by general applications, Bilibili has multiple ways to reach users, such as in-site red dots, in-site messages, appointment reminders, reminder assistants, etc., to ensure that users who have made appointments will not be lost. At the same time, various reminder methods are perfectly avoided through strategies, and reminders will not burst out at the same time. Instead, reminders are given at time intervals, so that users are reminded but not annoyed.

【 Game video bundled combination 】

By leveraging its years of technology and video accumulation, Bilibili has combined games and videos in the Game Center and set up special areas. By clicking on any game in the Game Center, you can see specific user comments, corresponding game-related videos, gameplay guides and specific columns. The Game Center is more like a content forum, which enables players to understand, learn, share and discuss, and realizes an integrated experience. Users no longer need to download games and go to forums to look for experience posts. Instead, they can discover games, download games, play games, come back to discuss games, and continue playing games in a complete closed loop.

【 Recommended games that match the user's preferences 】

The games recommended by Bilibili have the following characteristics: (1) Japanese voice actors; (2) emphasis on plot; (3) originality and IP are the mainstream, with a strong audience base; (4) innovative character design and painting style; (5) the PK system is greatly weakened. By strictly selecting games, the conversion rate from recommended users to conversion players is guaranteed to be accurate enough, which makes it easier to trigger sharing.

We can see that Bilibili's user-friendly strategy is actually very effective. It has a group of users with high consumption desire, willingness to accept new things and high stickiness. It forms a clustering effect at a certain scale, uses content to attract such a large number of users (the content cost is only 262 million, accounting for 13.6% of the total cost), and mines corresponding commercial games based on their interests. It converts users into paying users, uses games to feed back video content and bandwidth costs, and realizes a healthy consumption closed loop. It has to be said that its commercialization idea is extremely similar to that of Amazon Mall.

How an all-round entertainment media platform can become a new world may happen in the near future.

This article is from @Zhihu and compiled and published by (Qinggua Media). Please indicate the author information and source when reprinting!

Product promotion services: APP promotion services, advertising platform, Longyou Games