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If Bilibili’s stock price wants to rebound, it still has to rely on games-DoNews

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If Bilibili’s stock price wants to rebound, it still has to rely on games-DoNews

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Editor | Li Xinma

Topic picture | IC Photo

Since the beginning of this year, station B games have continued to move.

Bilibili game high-level change, after the chairman and CEO Chen Rui took over the game business, the outside world has raised doubts about the Bilibili game, and many media have repeatedly analyzed the detours that the Bilibili game has gone through in the past few years.

In fact, Station B does not shy away from this point. In the third-quarter financial report conference call just now, Chen Rui stated frankly: “In the past two years, the development of the game business of Station B has not been as good as expected. The main reason is that the self-development of the game has taken a detour.”

This is quite evident in the business data.

It can be seen from the financial report for the third quarter that the total net income during the period reached RMB 5.79 billion (RMB, the same below), an increase of 11% over the same period in 2021; among them, game revenue was RMB 1.47 billion, an increase of only 6% year-on-year. Although it still accounts for 25% of Bilibili’s Q3 revenue, the growth needs to be further accelerated.

However, although the plight of games at station B still exists, it does not mean that games at station B have no future. In fact, game self-development is a difficult road, and detours are inevitable. Even MiHoYo canceled Project SH led by CEO Cai Haoyu two days ago. Cai Haoyu stated in an internal letter that projects have always been more successful than failures.

For station B, detours in the process of game self-development are also inevitable. In a sense, these are all tuition fees, and if you pay them early, you can avoid stepping on more pitfalls in the future development process.

Judging from the resumption of distribution of game version numbers this year, we also want to suggest to Station B that Station B has a lot of accumulation in game development and distribution. It is absolutely correct to stick to the game business, especially the self-developed game business choose.

From the series of actions at station B this year, Chen Rui also has relevant thoughts. Whether it is the high-level change of station B, the establishment of game development, distribution, and art middle station, or Chen Rui’s reaffirmation of the strategy of “self-developed products and global distribution” in the Q3 phone financial report, it can be regarded as station B’s past mistakes. Learn lessons and experience, and make a big turn.

Obviously, Bilibili intends to concentrate on the game to do big things.

1. Games: the “vanguard” of the commercialization of station B

In 2011, Chen Rui joined bilibili as an angel investor to promote the corporate operation of station B. In 2014, he officially joined bilibili as chairman and CEO. During his tenure, station B entered a period of rapid development.

At the beginning of Station B’s establishment, it had little to do with games. Chen Rui’s joining led to the commercialization of Station B, the most important of which is undoubtedly games. “In fact, Bilibili’s game business is a natural result. Because Bilibili is the platform with the highest concentration of game users in China,” Chen Rui said in this quarter’s conference call.

In 2016, Station B represented the Fate series of mobile games “Fate/Grand Order” (Fate-Grand Order, referred to as FGO) released by Japan’s Aniplex. In May 2017, it once surpassed Tencent’s King of Glory to top the AppStore list.

Image source: bilibili games

In 2017, FGO accounted for as high as 71.8% of the total mobile game revenue of Station B; another “Azur Lane” contributed 12.7% of revenue, and currently ranks second among games represented by Station B.

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Azur Lane WIKI Image Source: bilibili Games

At that time, Bilibili, even because the game revenue accounted for as high as 80%, was called “a game company in a barrage coat” by the outside world when it landed on NASDAQ in 2018.

It was also in this year that the game version number was tightened, and the domestic market was cold, which resulted in the inability to launch high-quality foreign two-dimensional products in time; in 2019, “Tomorrow’s Ark” got rid of the channel provider and went online, which made the channel less important. Two-dimensional manufacturers Gradually tend to self-developed. As a giant in the two-dimensional game industry, Bilibili has inevitably been affected, and the number of games released each year has dropped to about 10.

The industry is already tense, and the “involution” is even more intense. The launch of “Original God” has brought the quality of the entire two-dimensional game to a high point. And the game is an industry with a strong Matthew effect, which directly leads to the influx of a large number of two-dimensional players into “Yuan Shen”.

Image source: Yuanshin

Fortunately, the development of other businesses such as live broadcasting and advertising on Station B has relieved the pressure brought about by the slowdown in the growth of the game business.

It stands to reason that diversification of income should be a change that bilibili and the market would like to see, but the live broadcast brings not only income to station B, but also a huge sharing cost, which drags down the company’s overall gross profit level. And the short video platforms represented by Douyin and Kuaishou are gradually rising. Whether it is live broadcast or advertising, they have divided the industry into a big piece of cake, which makes Bilibili feel pressured.

After the release of the financial report for the fourth quarter of 2021, Station B gave a timetable for breaking even by 2024.

However, in order to achieve this goal, other businesses are still not enough to shoulder the burden. Station B has to go around and around, and still has to rely on the former pillar-games.

2. Where to start the game business?

Since the plan is to regain the game, it is necessary to start a drastic “reform”, which also leads to the change of high-level game executives at station B.

On November 4th, Station B issued an internal email “Notice on the Adjustment of the Game Business Reporting Line” to adjust the reporting line of the game business-related teams. The game publishing business department, game cooperation department, game community department, and game innovation product department And the reporting line of multiple game studios was adjusted from the company’s senior vice president Zhang Feng to the company’s CEO Chen Rui.

Chen Rui believes that in the past two years, the game business development of Station B has not been as good as expected. The main reason is that the self-development of games is too extensive, and multiple teams are exploring at the same time. The result of this method is bound to be a little taste, greedy but fruitless.

In the third quarter financial report, Bilibili stated that it will continue to focus on the game business strategy of “self-developed high-quality goods, global distribution”, and will also emphasize more on the positioning of the game business as the main business of Bilibili, and truly put the strategy emphasized in the past on Real place. “In terms of game self-development, I will only focus on one or two directions, concentrate our energy and resources to do the least things, but do what we want to do best in the industry.” Chen Rui said.

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The game industry has also shown signs of recovery in the near future. On November 16, the People’s Financial Review published a review article entitled “Deeply Exploiting the Value of the Electronic Game Industry”, emphasizing that in addition to the role of games in entertaining the public, it also has a positive impact on the country. The industrial layout, technological innovation and even cultural dissemination are meaningful; on November 17, the State Press and Publication Administration announced a new batch of domestic game version numbers. This time, a total of 70 games have obtained version numbers, involving many listed companies. Since the beginning of this year, the sixth batch of domestic online game version numbers has been issued, and the industry may “open the gates and release water”.

The game version number affects the launch of game products, which in turn affects the nerves of the market. It is just right for Chen Rui to pick up the game at this time.

For station B games, it is not impossible to rely on self-developed games to revive the market.

Although Bilibili games have performed poorly in the past two years, the accumulation is still profound. Even when the version number is indented and the entire game environment is down, Bilibili games still maintain the same growth rate as the market. In the past two years, there have been small hits, such as “Kangong” on the agent, “Time and Space Hunter 3”, “Warm Snow”, “Mobile Battle Girl” and so on.

This year, Bilibili’s exclusive agent “Azur Lane” has celebrated its 5th anniversary, and it is still Top 5 on the AppStore bestseller list, with more than 20 million registered players. Bilibili seized the opportunity and offered one after another a wave of benefits, celebrating the fifth anniversary for half a month. It can be said that it has done marketing with great care.

Image source: bilibili game Azur Lane WIKI

The exclusive product “Time and Space Hunter 3”, which was launched in June this year, sold out 170,000 reservation qualifications in seconds during the deletion test phase. By the time of its launch, more than 7 million reservations had been made on the entire network, and it topped the AppStore free list TOP1 on the day of the public test. This is not only a successful case of a non-“two-dimensional” commercial mobile game, but also an important attempt to explore the business of games at Station B.

Image source: bilibili

In terms of single-host independent games, the new independent game “Warm Snow” released this year has won the Best Rising Star of the 2020 China Independent Game Competition, and the most anticipated game of the 2022 Golden Tea Awards, showing excellent game quality. On the first day of landing on the Steam platform, it topped the best-selling list, and won the top spot in the sales list of domestic independent games in the first half of 2022. Up to now, “Warm Snow” has an overall positive rate of over 90% on the Steam platform.

Image source: bilibili

In addition, the two-dimensional game, whether in the domestic or international market, the market space is getting wider and wider. “Onmyoji”, “Tomorrow’s Ark”, “Yuan Shen” and other high-quality products emerge in endlessly. Every 1-2 years, there will be new products breaking through the ceiling of the industry. In Japan, it surpassed “Yuanshin” and became the first in the market.

“Racing Horse Girl” Image Source: Internet

Bilibili, with a monthly activity of 300 million, is the platform with the largest number of 2D users in China, and also holds the richest and most comprehensive 2D crowd data and content consumption trends. If station B can take advantage of this advantage and combine the community ecology of the main station with self-developed games, then the field of two-dimensional games will have a rich imagination.

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For station B, there is only one self-developed game that can be sold.

This is also what station B should or is doing at the moment.

3. Bilibili games, the future can be expected

Since the beginning of this year, commercialization has been raised to an unprecedented strategic height by Bilibili.

For station B games, what deserves special attention is the mutual promotion of game live broadcast and community content.

During this year’s S12, the peak popularity of the live broadcast room at station B reached 300 million, and over 100 million people watched content related to “League of Legends” on station B. The live broadcast of DOTA/CSGO/Overwatch and other events has also become popular at station B, which has driven the blowout of game content and made many UP hosts become live broadcast anchors.

It can be said that the game live broadcast and game content of station B have entered a virtuous circle. And this healthy and developing community game ecology can become an amplifier of Bilibili games and help the development of Bilibili games.

Image source: bilibili

In this quarter, the average daily active users (DAU) of station B reached 90.3 million, and the average monthly active users (MAU) reached 333 million. Both figures increased by 25% over the same period in 2021.

Compared with MAU, DAU is more representative of the quality and sustainability of user growth, and the value of DAU and the commercial realization of the platform is more bound. In the past three years, the three-fold increase in MAU proves that Bilibili’s “community + ecology”-driven growth model is successful, and it also proves that Bilibili can grow at a high speed while maintaining high-quality users.

Chen Rui made it clear in the conference call: “We feel that the MAU of station B still has a lot of room for improvement. If we continue to develop according to our current growth model, I think the 400 million MAU target next year will definitely be achieved. .Next year, strive to raise the ratio of daily active users to monthly active users to 30%.”

Station B has been established for 13 years, but when thinking of young people, the first thing that pops up in many people’s minds is Station B. If you catch young people, you will catch the future.

According to the financial report of Q3, the cost reduction and efficiency increase of station B has achieved initial results, and the loss has narrowed by 36%. In the foreseeable future, this action will further reduce the operating costs of Station B. I believe that whether it is 400 million MAU or the goal of breaking even before 2024, it is not too far away from being realized.

It can be imagined that if station B has a representative self-developed game, with the support of 400 million MAU and a good game atmosphere, station B can quickly develop IP in addition to game revenue, such as animation, movies, peripherals, etc., forming Maximize the IP effect.

With the overall healthy development of Station B, the important task of Station B is to make games well, bring the game business back to life, grow bigger and stronger, truly take advantage of the platform and traffic, and assume the important task of “cash cow”. For Station B, this is not just a matter for Chen Rui to take charge, but also to do a good job in tasks including sorting out internal talents, concentrating on cultivating talents, encouraging internal innovation, and concentrating on self-research, so as to close the previous model of spreading the pie step by step return.

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