In recent years, there’s an increasing trend that building a community helps increase the “stickiness” of online platforms and we’ve started seeing many companies hiring for a Chief Community Officer. There’s one company that seems to have cracked the code for building a hyperactive, relatively well-behaved online community that doesn’t seem to require much policing by moderators—Bilibili.
Bilibili was first launched in June 2009 and they started out targeting the (Animation, Comics and Games) ACG community, or otherwise known as an Otaku in Japan, or a weeb🤣. Since then, it has broadened its coverage to include live streaming, gaming, and e-commerce.
The platform is extremely appealing to the Gen Z of China and has grown its users extremely rapidly. In Q4 2020, monthly active users (MAU) have grown by 55% to hit 202 million! To put this in context, China currently has 450 million people between the ages of 12 and 36 (I don’t really see people older than 36 coming onto their platform yet).
Bilibili helps you show your favourite content on this platform and their unique value proposition is their highly engaged community, as their content is mostly user-generated.
They do have a unique way of preventing “lower-quality members” (aka trolls) from contributing content.
While most platforms make it super seamless for you to sign up and engage, Bilibili does the exact opposite. To gain the privilege of commenting in the community, you first have to answer 100 questions!
You have to get at least 60 questions right, and yes… A lot of the questions were directed at what are the appropriate behaviours on the platform, and other questions were for testing users’ knowledge of ACG.
Here’s a sample of what their test looks like:
The result of this high friction entry point is that it filters out lower-quality members. If you have joined any community that has grown too big too rapidly, the end result is that it becomes really toxic and does not protect the culture of the original community.
I did and passed as part of my research (or perhaps I’m just a closet Otaku?😂).
Based on the statistics, I scored 60/100, which is the bare minimum to pass, and I’m at the 77th percentile?! This shows how many people they actually kept out of commenting on the platform and their commitment to the quality of engagement.
Out of its 202 million MAU, 103 million of them are “official members”, or those who have passed the 100 questions test.
Once you pass their test, you have gained the right to comment! And this is something they do differently, your comments will float on the screen, and yes, it does look incredibly messy but this is integral for fostering a community on the platform. This makes it feel like you are watching the video with friends and the collective response often adds humour to the original material.
Notice that some of the comments by users are white, while others are in different colours, those whose comments are of a different colour actually paid for this function—to make their comments stand out from the rest!
There are four ways Bilibili monetizes its platform: (1) Advertising, (2) Gaming, (3) Value Added Services (VAS), and (4) e-Commerce and others.
This is how their revenue mix looks like:
Advertising. The way they do it is similar to what we see on Youtube, with pre-and mid-roll ads, amongst others that are plastered over the webpage. The company is careful with over-commercializing to protect its community spirit, and Rui Chen, CEO of Bilibili plans to keep ad load flat at 5%.
Gaming. Fate Grand Order is Bilibili’s flagship gaming product, and it acted as a cash cow for the company to invest into other areas (similar to what Garena is doing for Shopee). Over time, the revenue from gaming has shrunk from over 50% to 11%.
Value-Added Services (VAS). VAS could be split into two segments: Premium Subscriptions and Live Broadcasting. Premium subscriptions provide users with exclusive content and it costs between 20-25 RMB a month ($3-$4 USD). They currently have 14.5 million users, up 60% YoY. This segment currently makes up 43% of VAS revenue and the company plans to invest more into creating content to convert users to premium paying members.
Live broadcasting revenues are generated from creators selling virtual items during live streams, or it could be users sending the creators a virtual gift to show appreciation which can produce special effects (similar to Twitch). Bilibili has a take rate of between 30% to 45%, this means that for every $10 earned by the creator, Bili takes a $3 to $4.50 slice of the pie.
e-Commerce and others. Bili’s e-Commerce presence is still very nascent and they focus on ACG merchandise by working together with Alibaba to list their products on Bili’s platform.
I’m really impressed with how they are able to scale their community while retaining the original culture. Despite increasing the friction by requiring members to answer 100 questions, Bili has grown MAU from 93 million in 2018 to 202 million in 2020. It is good to see that the company has become less dependent on mobile gaming revenue as they grow their VAS, but it still remains a significant risk as the Chinese Government has demonstrated willingness to cut off the gaming sector should their youths become at risk of severe video gaming addiction.