Liu Xiaokui, COO of HCR analyzed that Q1 loss further expanded in B station, and

Source: Unknown Date: 2019-05-20 06:57:00
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On May 14, Bilibili (hereinafter referred to as "B station", NASDAQ: BILI) published Q1 financial report in 2019. According to the financial report, Q1 total net revenues were RMB 1.374 billion in B station, which were increased by RMB 868 million than the same period last year, and increased by 58% on a year-on-year basis. It is worth mentioning that, the monthly active users broke through a hundred million for the first time in Q1 B station, and reached up to RMB 101 million. 

Meanwhile, Q1 net losses were RMB 195.6 million (about USD 29.2 million) in B station in 2019, and the net loss rate was 14%, which was expanded by 238% than RMB 57.8 million net losses in the same period last year. 

Journalist of China Business Journal also noticed that, the main revenues of B station are still mainly from games, and under the condition of the increasingly obvious head effect in the games field, how to make full use of the positioning of two dimensional users to realize better commercial cashing has become the emphasis of people on B station. 

The net losses were expanded by 238% in the same term 

As can be seen from the income structure, incomes of B station are mainly from games, live broadcast, membership, advertisement, e-commerce and other businesses. 

According to the data of financial report: Q1 mobile game revenues were RMB 873.5 million in B station in 2019, while the revenues were RMB 688 million in the same period last year; Live broadcast and value-added service business incomes reached up to RMB 290 million in B station, which was increased by 205% on a year-on-year basis; Q1 advertisement incomes reached up to RMB 110 million in B station, which was increased by 60% on a year-on-year basis; E-business platform "" has accelerated the revenue business of e-business and other businesses, and Q1 incomes have reached up to RMB 96 million in e-business and other businesses, and realized 621% high-speed year-on-year increase. 

Although the total revenue is increased, the loss is still expanding. B station suffers from RMB 195.6 million (about USD 29.2 million in total) Q1 net loss in 2019, which was expanded by 238% than the net loss in the same period last year.

Liu Xiaokui, COO of HCR expressed while accepting the interview of the journalist that: "B station doesn't have a unique mode of cashing, which may be the issue worried by investors. Amazon is always loss-making, but people still think that it is hopeful." Liu Xiaokui held that, loss expansion was mainly caused by the weak foundation in the early stage, and now the input still increases. 

The research and investment team of Tiger Brokers also expressed to the journalist that, this was caused by the big increase in cost, while cost includes game developer and channel expenses as well as the input in video contents. 

Difficulties in two dimensional commercial cashing 

According to the information, B station contents can cover study, food, pets and entertainment. As for the contents, dank memes are the core force of B station contents, and video clips like Lei Jun's "are you ok", Cheng Long's "duang", Tang Guoqiang's "Zhuge Wanglang" have become contents widely transmitted by netizens. B station has been regarded as a two dimensional cultural gathering place, and two dimensional cultural fans have built a closed circle here. 

Industrial opinions held that, there are huge quantities of two dimensional users, but more thresholds seeking for commercial cashing, so it is requested to break through two dimensional barriers. However, some other people held that, two dimensional attributes are the key points that make B station different from other video websites, and there is no need to break through two dimensional. 

According to the research and investment team of Tiger Brokers, B station has already broken through two dimensional barriers, converted towards comprehensive PUGC community, and the ceiling has been broken through constantly. "B station has a favorable user foundation in two dimensional groups, and this is good for game promotion. However, in the face of the big pressure from Netease and Tencent competitors, it is necessary to break through two dimensional, and contents-oriented user flow has a bigger potential in advertisement." 

Liu Xiaokui expressed different opinions to the journalist. He expressed, there is no need for B station to break through two dimensional barriers, and in case of failing to do it well, it may be a disaster to break through the barrier. " also has outstanding characteristics, and previously, its characteristic was breaking through campus, but the effect was awful." 

Insiders held that, two dimensional users are good selling points of market segment, with no need for BAT. Because it cannot realize the same effect with BAT, and this isn't its gene. "Therefore, it shouldn't be engaged in flow expansion, I think it should focus on the mode of current flow cashing." 

Games are still the main source of revenues 

B station mainly relies on gaining incomes from games, advertisements, e-business, live broadcast and value-added business. According to financial reports, the biggest revenues of B station are from games. According to financial reports, game incomes reached to RMB 870 million in B station in the first quarter of 2019, and occupied 63.5% of total revenues. 

According to the information, B station mainly focuses on the agent of game business, and Japanese games, including Fate/Grand Order (FGO) and Azur Lane occupied about 85% of game incomes. 

Although games are the main source of revenues in B station, it still has a gap with giants in the entire game industry. According to the statistical data of Gamewower, among 25 listed game companies, Tencent ranked the first in game business revenues (RMB 128.4 billion) in 2018, while B station ranked only top ten (RMB 2.933 billion). Threshold for games has become increasingly high, and B station is mainly engaged in game agency, without strong R&D capacity, so its agent products are also limited. In contrast, Tencent and Netease are not only engaged in game agency, but also possess their own capacity to develop games. 

However, in other modes of cashing, "everyone is fond of advertising, with few inputs, but it is different from e-business, because you need to have good characteristics." Liu Xiaokui said that, B station's problems are focused on exploring various modes of cashing, without a dedicated profit-making mode. The case is similar to Baidu Tieba, which was favored and well received by young people a few years ago, but there hasn't been any better mode of cashing yet. 

Aforementioned insiders said by giving examples, Netease games no longer relied on websites to drive the inlet flow, and if you focus on one thing, you may have a good development prospect. In contrast, games used to be important cash flow for Sohu, but Sohu failed to focus on games, and spent lots of money on videos. This has caused the failure in strengthening the true benefit-making business, without any effect in the end. 

Liu Xiaokui said that, "B station faces the same problem, it has no creativity, so I think B station should make good use of two dimensional groups in cashing, and spend money on the most important aspects. For instance, B station has excellent IP teams. Many marketing companies are looking for such big IP, to realize flow cashing. It is still insufficient in a deeper and professional aspect."