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News Jun 2, 2020 04:35 am EqualOcean

Bilibili is Launching a Remote Sensing Satellite

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Jul 27, 2020 02:24 pm · cnBeta

Bilibili Launches Video Editor App Targeting to Youths

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Jul 17, 2020 09:45 pm · eastmoney

BOCOM Changes Bilibili Target Price from USD 38 to USD 47.60

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Jul 17, 2020 11:54 am · 36Kr

Bilibili Will Push Eleven New Games

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Jun 24, 2020 10:55 am ·

Bilibili and the Mobile Gaming Adventure

If you ask a random young Chinese person, ‘what kind of company do you think Bilibili is?’ there is a large possibility that they will tell you it’s an online video platform. If you ask a random Chinese young person who likes e-sports, ‘what do you think of Bilibili?’ it is very likely that you will receive an answer like, ‘I use Bilibili simply because they signed the streamers that I continuously follow and have the exclusive broadcasting right of the e-sports event that I am interested in –I don't really care about whether the platform is Bilibili, Huya or DouYu, just whether they can deliver the names that I want." If you ask a random Chinese young person who plays the Chinese version of ‘Fate/Grand Order’ – a hot Japanese ACG mobile game – ‘what you think contributed the most to Bilibili's survival in the past few years?’ probably they will say: ‘Fate/Grand Order’ – for sure, we contributed more than half of the company's annual revenue from 2016 to 2018, there was no chance for Bilibili to get listed without having Fate/Grand Order. Yet the operation team of the company did not provide us players the status and welfare we truly deserve.’ However, if you continue to pursue the matter and consult about them about whether they would be happy if the operator of the Chinese server were to change to Tencent or NetEase, most of the ACG mobile game players will tell you ‘no, it may become even worse. If you feel bad about Bilibili's operations regarding the Chinese server, the best way is to directly go to the Japanese server or the US server.’ In recent years, a suspect view has emerged that supposes that Bilibili is gradually moving towards ‘de-gamification.’ The original aim of this opinion holds that Bilibili is gradually optimizing its income structure and seeks to not let mobile games dominate its revenue stream, which is correct. What has been misinterpreted is the level of marginalization of mobile gaming. The main reason that leads to this misunderstanding is that people think that the online video sharing platform of Bilibili and its mobile gaming publication and operation business are two parallel segments. In fact, the two parts have close strategic synergies. They can be used to refer users from one side to the other, and sustain them within the ecosystem. More commercialization solutions can be launched while cultivating both sides. To understand this, we have to first clarify the nature of the two business segments of Bilibili. The other mainstream online video platforms in China – iQIYI, Tencent Video, Youku and Mango TV – mainly focus on delivering Professionally Generated Content (PGC), and operate in a similar matter as Netflix, Disney + and HBO, while Bilibili's platform is dominated by Professional User Generated Content (PUGC), where 90% of videos are made by individuals and small studios. Although its commercialization strategy is significantly different from YouTube, the two share certain similarities in terms of the nature of content providers. Apart from the PUGCs, Bilibili also covers the PGCs of certain categories, most of which are copyrighted Japanese animations. It's better to depict Bilibili's platform as a community – especially for ACG fans, its loyal user group – in which it employs video as the medium for interactions, rather than text, as in traditional ones. As for the mobile gaming market in China, a majority of projects that can achieve a certain scale can be classified into three categories: 1. MOBA and casual games with a high number of Daily Active Users (DAUs) and low Average Revenue Per User (ARPU). These meet the demand for social interactions and time-killing. Typical projects: Honor of Kings, Game For Peace, Anipop (a Candy Crush-liked puzzle game) Major content producer/publisher: Tencent 2. MMO RPGs based on classic IP. A type of game project that mainly targets males above 30, the revenue of the projects typically comes from the purchase of items that can add more power to the game characters of users. Typical projects: Fantasy Westward Journey, Perfect World, Eastward Legend: The Empyrean Major content producer/publisher: NetEase, Perfect World, Seasun Games (of Kingsoft) 3. ACG games, most of which are RPG Gacha games. Here users mostly care about the IP, storyline, characters' design and illustration, the revenue of the projects typically comes from the purchase of in-game resources that can provide trials for users to obtain certain characters. Typical projects: Onmyoji, Honkai Impact 3rd, Arknights. Major content producer/publisher: NetEase, miHoYo, Bilibili. From this brief introduction to the nature of Bilibili's video platform and gaming business, it is not hard to find out that both share a strong 'ACG' gene. Bilibili, as the largest interactive community of ACG fans in China, has a great advantage in publishing and distributing ACG games. The overlap of the player pool of ACG games and the users of Bilibili's video platform, plus the deep understanding of the ACG category accumulated during its ten-year experience, means the company can reach out to a large number of potential users on a new game project and help to increase the life-span of a single project through elevating the engagement level of ACG game users (by providing a decent community for users to place and watch fan videos). In this case, it is not hard to understand that some content producers who lack marketing and operating capabilities contract with Bilibili to exclusively publish its projects and allow it to share more than half of the revenue of the project. Even for mainstream gaming companies like NetEase and miHOYO, which normally publish the game they produced themselves, Bilibili is seen as an important distribution channel – they sign joint operating contracts with it. To make it more concrete, here we look into two cases, to see how Bilibili's video platform and mobile gaming business synergize. The first one is Fate/Grand Order and the second one is Azur Lane, which has respectively been recognized as 'Mobile game 1' and 'Mobile game 2' in all its past annual reports. For both projects, Bilibili acts as an exclusive distributor in mainland China, taking charge of all the publication and operation activities on the Chinese server. Fate/Grand Order is a Japanese RPG mobile game and a worldwide phenomenon, developed by Delightworks using Unity, and published by Aniplex (a subsidy of Sony). The game is based on Type-Moon's Fate series universe, which is one of the hottest IPs in the Japanese ACG area. The first commercialization creation of the collection was 'Fate/ Stay Night, ' a text adventure game published in 2004. Until now, the IP consists of 15 gaming projects and 23 animation projects, and 'Fate/Grand Order' is the most successful mobile game project amongst them. Before it launched its mainland China server in 2016, Bilibili had already purchased the broadcasting rights of the two other classic animation series under the same IP, which were 'Fate/ Stay Night [Unlimited Blade Works]' (released in 2014-2015) and 'Fate/Zero' (released in 2011-2012). So, when the 'Fate/Grand Order' Chinese version began, there were already a lot of active fans of the Fate series on Bilibili's platform, which made the game quickly gain its initial user base. Besides, as 'Fate/Grand Order' became more and more popular, the number of derivative PUGC videos based on the game and the IP that was uploaded to Bilibili's video platform continuously increased, which again helped to attract more new users to play the game and sustain the initial ones. Apart from this, during the four years from 2016 to 2020, Bilibili continuously purchased the broadcast copyright for Fate series animations, where most of which were released after 2016. As the users of the ACG games generally care a lot about the storyline, this will – on the other way around – push some of the fresh users of 'Fate/Grand Order' to Bilibili's video platform to watch more animations that belong to the same IP. Up to now, there have been 19 Fate series copyrighted animations available on Bilibili's video platform, 7 of which have accumulated more than 50 million views and more than 10 million bullet chats (a live commenting function that enables content viewers to send comments that fly across the screen like bullets). In a 24-hour span on June 21, 2020, there were 179 original PUG videos related to the Fate series submitted by individual users to Bilibili's platform. These numbers give us an opportunity to grasp why the Chinese server of 'Fate/Grand Order' can still generate such fruitful revenue even in its fourth year of operations. The great synergy that Bilibili's video platform brings to its ACG game distribution and operation business can also be examined via the success of Azur Lane, which was created by Chinese developers Shanghai Manjuu and Xiamen Yongshi, released in 2017, and is exclusively distributed by Bilibili in the mainland. As of June 21, the official account of Azur Lane on Bilibili has 1.23 million followers. There have been more than 100,000 Azur Lane-related videos created and uploaded to Bilibili's platform, and 823 of them have accumulated more than 100,000 views. 78 live streamers on Bilibili specifically target Azur Lane related contents, and there were 20 of which in the middle of a live during 6pm June 22, 2020. This strong and suitable interactive environment that Bilibili's video platform provides to the ACG mobile games players largely increases the level of engagement of these people, which in turn helps to form higher user stickiness and elevate the life span of the game, contributing to the major competitive advantage of Bilibili's mobile gaming business. Although China's gaming market as a whole is moving towards a rather mature stage, the ACG mobile gaming market, with only four years of development, is still in a very initial stage and is much smaller than the MOBA and MMO RPG gaming market – which are the major categories in the Chinese market. Also, it is still very hard to sketch the market size from the annual revenue of the top projects, as each year there are new star projects that came out and make the ACG mobile gaming category go through the roof as regards the projected market size. However, also owing to the issue that the supply of good projects is currently far less than the demand, the bargaining power of top ACG game producers is continuously increasing, which gives Bilibili pressure to get the exclusive distribution contracts, as some of these content providers are more likely choose to sign a joint operation contract with the company – in which Bilibili can share much less revenue from the project compared to the former model.

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Analysis EO
Jun 5, 2020 02:20 pm ·

Bilibili Marching towards ‘Controlled Expansion’ [2/3]

► Bilibili (BILI:NASDAQ) announced its first-quarter results last May 18. Its stock price hit a record high midday and closed with a 9% increase at USD 33.66. ► By the time this article is published (June 4), its price was USD 33.56. This is the second part of a series of articles discussing the financial results and the business of Bilibili. Find out more in the previous chapter, which addresses the revenue and loss, as well as the income structure of the company. First-quarter 2020 key user base figures highlights: Average Monthly Active Users (MAUs) reached 172.4 million, representing an increase of 70% from the same period in 2019. Number of official members reached 82 million, representing an increase of 67% from the same period in 2019. Average Monthly Paying Users (MPUs) reached 13.4 million, a 134% increase from the same period in 2019. Bilibili, apart from being a game publisher, is also a Chinese mainstream video sharing platform. In this space, it is attempting to race with two types of competitors. One is the three dominant online streaming platforms – iQIYI (IQ:NASDAQ), Youku Tudou, and Tencent Video, who are Netflix-styled media-services providers and producers. Meanwhile, Bilibili’s business shares certain similarities with YouTube and Niconico. Although it has been digging deeper into the fields of animation, cartooning and cinematography (one bellwether is the firm’s increasing copyright spending), it is still a platform dominated by Professional User Generated (PUG) videos, which accounted for 90.1% of total videos viewed in 2019. This model is not likely to be changed in the future. The other is short-form mobile video sharing platforms such as Douyin (the Chinese version of TikTok) and Kuaishou. Compared to these players, the videos on Bilibili have, on average, a longer duration, and in general, are more verticalized and professional. The size and the growth rate of the user base have always been crucial in assessing the competence of video platforms, as these presumably constitute the most valuable ‘assets’ for them to cash out in the future. However, the underlying driver for user growth has considerable differences. The trend of the content to have copyright or to be self-produced can be considered the most important element for online streaming platforms; for short-form video platforms, this lies in the preciseness of their distribution algorithms. For Bilibili, its moat is built upon its user experience, and more precisely, its irreplaceable community culture that was established and is maintained jointly by the users and the company. The community entrance test and punishment mechanisms of Bilibili are probably the strictest among all the mainstream online video platforms in China. Only through passing the test, which consists of 100 questions covering community etiquette and various topics, can users become ‘official members’ and be eligible to access more features like sending more types of ‘bullet chats’ (a live commenting function that enables content viewers to send comments that fly across the screen like bullets), upload PUG videos, send private messages to other users and comment on videos. This official member system in Bilibili is parallel with its paying user system, which implies people cannot become an official member by paying money to the platform. These functions, to a large extent, controlled the ‘ghost followers’ issue in the first place and ensure the frequency and quality of interactions. Apart from this, the rather strict community etiquette rules restrict misconducts like flooding the screen, personal abuse and fabrication. All official members with at least level 4 membership (Bilibili’s official member system currently ranges from level 0 to level 6) can volunteer to join the governance committee if they haven’t broken the community rules in the past 90 days and have completed the real-name verification, to maintain the community culture of Bilibili together with its employees. It has to be mentioned that keeping decent community etiquette does not, in fact, contradict the commercialization of Bilibili, especially talking about the long-term. No matter if we speak in terms of advertisement income, synergies with its gaming business, subscription fees or future initiatives. However, this has also made hitting a perfect pace of user growth a tricky issue for Bilibili. On the one hand, as a growth stage company, it needs a relatively sharp user expansion to increase its scale, speed up its commercialization process and scale of commercialization and to satisfy its investors. On the other hand, if the campaigns that target user growth are overly aggressive, it runs the risk of ruining its sound community culture, which may result in harming long term interests in exchange for short term benefits. In the three-month period ending March 31, 2020, Bilibili witnessed the largest amount of MAU increase in a single quarter (172 million, 70% YoY growth and 32% Quarter on Quarter [QoQ] growth) since it started its operations in 2009. Meanwhile, both MPUs (13.4 million, 135% YoY growth and 52% QoQ growth) and official members (82 million, 67% YoY growth and 21% QoQ growth) increased sharply during the quarter. We think the major contributions towards the sharp increase in user base (as measured by MAUs) are from two aspects: 1. the lockdown policies during the COVID-19 outbreak increased people’s demand for video platforms; 2. the New Year Eve Gala held by Bilibili on the evening of December 31, 2019, was a great success (we discussed this story in part 1 when talking about its live broadcasting and the associated value-added services). It has been seen by many as a milestone for Bilibili, letting it become known by the majority, not only the young generations. The ratio of MPUs as a percentage of MAUs has been increasing steadily since Bilibili got listed in the first quarter of 2018 (3.2%) to the first quarter of 2020 (7.8%), suggesting the commercialization capabilities of Bilibili as a video platform have been continuously increasing. Although it is unlikely that Bilibili will become a comprehensive platform for all kinds of professionally-produced drama and movies as well as self-produced series – as mentioned before – it has been continuously purchasing more copyrights of animations and movies that harmonize well with the flavor of the majority of its users. For example, The Lord of the Rings and Harry Potter. As a result of Bilibili’s strict community etiquette controlling rules, the ‘bullets chatting’ on the platform, in general, has a considerably higher quality compared to that of the alternative platforms. Therefore, Bilibili has its unique competitiveness in attracting people when they are making decisions on which platform to subscribe to for certain professionally produced content, and this can be supported by the steady increase in the MPU/MAU ratio. Apart from this, structural shifts regarding consumer behaviors among the general population in China – for example, the consumption upgradations and the formation of the habit of paying for copyrighted materials – also contribute to the ongoing optimization of Bilibili’s paying user structure. The figure of official members as a percentage of MAUs was 47.6% in the first quarter of 2020, which was a drop compared to 52.2% of the last quarter (the fourth quarter of 2019) and 48.4% of the same period in the prior year (the first quarter of 2019). Considering the significant expansion in the user base during the quarter, the width of this drop can be considered as lying in a reasonable range. However, at the same time, we consider the proportion of official members compared to MAUs as a key ratio to keep an eye on when assessing the performance of Bilibili in the future. Bilibili’s official members tend to have a remarkably high engagement level, historically speaking. The 12-month retention rate of its official members has been continuously above 80% since the company got listed. For a video platform dominated by PUG videos, high user engagement is crucial to attracting and sustaining users, content creators and advertisers. If this percentage decreases to 45% or below – which was the level in the first quarter of 2018, when Bilibili got listed – then it might contribute to negative factor in assessing the long-run performance of the platform. Talking about the supply side of the content creation, as mentioned before, the major advantage of Bilibili in the intense market of online entertainment platforms is the high-quality content produced by the creators – commonly individuals and small studios – and uploaded to its platform. In the first quarter of 2020, the average number of content creators on Bilibili reached 1.8 million and average monthly video submissions reached 4.9 million. Both figures realized a sharp growth which had almost doubled compared to the prior quarter. As Bilibili only reported these figures in its annual report, we cannot compare this on a YoY basis, and it is fairly logical that the content creators tend to be less active in the fourth quarter, given the majority of them are students. Comparing these figures quarterly to quarterly can thus have a certain bias. However, the slope of growth during the quarter is apparently out of the scope of this seasonal fluctuation, and the lockdown policies during the COVID-19 would be the most significant driver. We expect the two figures are very likely to witness a slight to moderate decrease in the second quarter of 2020, as compared to the numbers in the first quarter. These PUG videos on Bilibili tend to be much longer, verticalized and professional – they satisfy people with niche hobbies, as compared to short-form video platforms. For example, these include some ‘typical’ contents on Bilibili like Anime Music Videos (AMV), mashups and ACG dance (originated from Japanese video-sharing platform Niconico); besides, with the category expansions of the Chinese video-sharing platform in recent years, classifications like history, finance, lifestyle and beauty have also become popular on the platform for now. Also, the primary reason for a large part of content creators to produce videos and upload on Bilibili is to interact and communicate with people with the same interests and gain more awareness in the field, which is considerably different from those on Douyin and Kuaishou, where a lot of content is incentivized by earnings. However, at the same time, this does not imply that Bilibili does not have competitors in terms of attracting sustaining content creators. From our perspective, the moat of Bilibili currently lies in three aspects, and whether it can sustain its advantages and enhance them are key points to keep an eye on in the future: 1. Good community etiquette guaranteed by strict rules that punish misbehavior, which provides the creators with a decent environment for communication and interactions; 2. Decentralized content distribution algorithm, which gives regular creators more exposure and more opportunities for their videos to be found by users with similar interests; 3. Incentive plans for creators, where Bilibili will give a small amount of money to creators according to a set of evaluation criteria which includes the number of views, bullet chats and favorites, as well as qualitative standards like the value and level of professionalism of the contents. However, it is worth noting that this can be a mixed blessing, whether Bilibili can prevent data fraud and commercial accounts (accounts that collect specific contents and simply repost in exchange for traffic and profits) from flooding on its platform – just like what has happened with Sina Weibo – is crucial for its further development.

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May 22, 2020 10:10 am ·

Bilibili Q1 2020, Marching towards ‘Controlled Expansion’ [1/3]

Bilibili (BILI:NASDAQ) announced its first-quarter results late May 18. Its stock price hit a record high midday and closed with a 9% increase to USD 33.66. First Quarter 2020 highlights: Total net revenue reached RMB2, 315.5 million (US$327.0 million), a 69% increase from the same period in 2019. Loss from operations was RMB 544.2 million (US$76.9 million), compared to RMB306.7 million in the same period of 2019. Average Monthly Active Users (MAUs) reached 172.4 million, representing an increase of 70% from the same period in 2019. Average Monthly Paying Users (MPUs) reached 13.4 million, a 134% increase from the same period in 2019. In this series of articles, we will discuss: Part 1 – Key financial performance of Bilibili in the first quarter of 2020; Part 2 – Key operating performance of Bilibili in the first quarter of 2020; Part 3 – Key aspects to keep an eye on in the future: Community culture and gaming business – two central aspects that are building up the moat; Live-streaming – new initiatives that can be considered as a short-term growth engine; …and the associated defensibility, opportunity and risk. All the contents will be released according to the sequence in the coming days, please stay in touch to explore more. Revenue and loss ► Bilibili’s income structure has been continuously optimized. Mobile games remained solid, while the new initiative of live broadcasting witnessed strong growth momentum. ► Income structure inside the mobile gaming segment has become more diversified; the dependency on a single item (Fate/Grand Order) continued to decrease. The game business, the base of Bilibili, remained solid in the first quarter of 2020, witnessed a 32% growth on a year-on-year basis, to realize CNY 11.51 billion of revenue during the three months ended March 31. Up to now, the revenue of this segment mainly came from distributing and operating mobile games produced by other companies. As the majority of which are role-playing games (RPG), what contributes the most to Bilibili’s gaming income is the recharge volume of users rather than advertisement and esports. Its mobile game segment mainly has three business models: exclusive distribution (32 projects; benchmarks include Fate/Grand Order and Azur Lane), joint operating (740+ projects; benchmarks include Arknights and Girls’ Frontline), and self-development (1 project). In the first category, Bilibili takes full charges of marketing and operations of the game, and has the right to price the value-added items in games. Whilst under the second category, Bilibili mainly provides promotion services to the developer of the game. This implies that compared to acting as the exclusive distributor, Bilibili has far less decision-making power under a joint operating model, and thus can generate much less revenue from the project. The income structure inside Bilibili’s mobile games segment continued to improve throughout the two-year post-IPO period. In 2017, revenue generated from the exclusive distribution of Fate/Grand Order in the mainland of China accounted for 71.8% of the total annual revenue of Bilibili (83.09% of total revenue from mobile games). This percentage has been lowered down to 58% for 2019. In April 2020, Princess Connect! Re:Dive started its open testing in mainland China, where Bilibili acted as the exclusive distributor. The game, which is developed by Cygames, has already realized considerable success in Japan and South Korea, and thus has accumulated a considerable potential user base in China. According to Guochan Erciyuan Shouyou Guancha (国产二次元手游观察, ‘National ACG Mobile Gaming Insights’), a widely-used source of information in the Chinese online gaming industry, Princess Connect! Re:Dive realized CNY 411.8 million of revenue in April in the mainland, and is expected to become the new profit engine of Bilibili’s mobile games segment. COVID-19 imposed both positive and negative effects on the revenue of the mobile games segment of the company. On the one hand, the lockdown policies tended to increase the user base and the average duration of users on mobile games, which then led to higher revenues; meanwhile, the downturn of the entire economy tended to decrease the overall spending of users on mobile games. However, despite the robust figure of Bilibili’s mobile games business in the first quarter of 2020, the underlying risk factors cannot be ignored. For example, the life span of its current revenue pillar – Fate/Grand Order; the current situation in China’s mobile games market led studios who produced phenomenal products tend to choose joint operate with Bilibili rather than allow the latter to exclusively distribute; the increasingly strict rules imposed by the policymakers on time spending and recharging for the minors. These will be elaborated on in the ‘Defensibility, opportunity, and risk’ part of this article, which is expected to be published this week. Live broadcasting and the associated value-added services continued their sharp growth in the first quarter of 2020 to realize CNY 793.6 million (USD 112.1 million) of revenue, representing a 172% year-on-year increase. Since the fourth quarter of 2019, the company has shown its ambition in the field of live game streaming. On December 4, 2019, Bilibili inked a three-year contract to exclusively broadcast League of Legends World Championship. Two weeks later, on December 19, Feng Timo, one of the most popular gaming KOLs who has over 20 million followers on DouYu (DOYU: NASDAQ) – a mainstream live streaming platform in China – announced she would end the cooperation with the company and sign a contract with Bilibili. COVID-19, which broke out in the following months, also provided Bilibili a good window of opportunity to attract more users in the field of e-gaming and to let them form habits in using the platform to watch live gaming broadcasting. This segment has been and is expected to continuously be a key user and revenue driver for Bilibili in the short term. However, at the same time, the onward marching of livestreaming imposed additional risk factors on Bilibili’s business, especially, in its short-term profits and long-term strategy, which will also be elaborated on in Part 3. Despite the COVID-19 outbreak, the growth in advertisement and e-commerce business remained relatively strong in the first quarter of 2020. The advertisement segment realized revenue of CNY 214.3 million (USD 30.3 million), representing a 90% increase on a year-on-year basis. This figure was lower than the CNY 290 million in the prior quarter. Potential reasons for this: 1. The demand. Bilibili’s 2019 New Year Eve Concert achieved great success. With more than 90 million playbacks, it marked a significant milestone for the platform to get known by the general population, apart from Gen Zs. In this case, it is reasonable that more advertisers are considering Bilibili when making their decisions on advertising. On the other hand, advertisers usually have a tendency to spend more in the fourth quarter and spend less at the beginning of each year – this, plus the negative impact on advertisers’ budget, can explain the downward trend on a quarter-on-quarter basis. 2. The supply. Bilibili is a platform started by targeting ACG fans alone; although it is expanding to cover more content and user categories, a good community culture still lies in the center of its competitive advantage. Therefore, to maintain a sound community culture and thus maintain the high retention rate of its loyal users, Bilibili has been continuously controlling its commercialization. However, considering the current stage of its business where certain expansions are needed, we believe that Bilibili has also released more ad loads. Loss from operations continued to expand in the first quarter of 2020, which was CNY 544.2 million (USD 76.9 million), compared to CNY 306.7 million in the same period of 2019 and CNY 419.9 million (USD 60.3 million) in the last quarter. We expect the figure will keep widening up in the upcoming quarters in 2020. First, the year 2020 is going to be an important year for Bilibili to attract new users, a considerable part of which will not belong to either category of ACG fans or Gen Z. This requires huge spending on online and offline marketing campaigns like holding events. At the same time, it has to maintain the engagement rate of its loyal users, which requires labor, financial incentives to PUGC creators and R&D to maintain community culture. Besides, in targeting both groups, Bilibili needs to spend more on purchasing the rights of having more dramas and movies on its platform. Second, Bilibili’s ambition on live broadcasting required considerable spending to purchase broadcast rights of the corresponding events of games and to sign more well-known KOLs in the field. Third, currently, the demand for phenomenal mobile games is considerably larger than the supply in the Chinese market. Therefore, more and more domestic game designer studios tend to choose to jointly operate with Bilibili, rather than sign exclusively distribute contract with it. This will likely impose a negative effect on the sustainability of Bilibili’s mobile games revenue in the future. A long-term strategy would be to improve the ability of self-development. In fact, we have also seen a flavor of Bilibili’s interest in this aspect from the USD 400 million investments it received from Sony in April 2020. This implies that the R&D investment of Bilibili is very likely to increase considerably in the near future. More to come.

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