In the past year, the US stock price of station B has fallen by 84% from its high level. Since the return of station B to Hong Kong stocks in April last year, the stock price has also dropped by 80%.
On March 3 this year, Station B announced its annual financial report. On the plus side, revenue and user data grew steadily. On the bad side, losses are getting worse. The net loss in fiscal year 2021 was 6.8 billion yuan, an increase of 119% compared to the same period; among them, the net loss in Q4 was 2.0958 billion yuan, an increase of 148% year-on-year.
It is a common phenomenon in the industry that long video platforms are not profitable. However, while iQIYI achieved its first profit in 12 years by reducing costs and increasing efficiency, Station B, which has been losing money for 7 years, is still unable to get rid of the heart disease of profitability.
In today’s industry situation, the story of “burning money for growth and strategic losses for the future” can no longer be told.
In other words, today’s capital market has changed the investment logic of China concept stocks, and has stricter requirements on the investment return cycle. They urgently need the platform to give an answer: “When will we be able to turn losses into profits and achieve profitability? .”
To this end, when releasing the financial report for the fourth quarter of 2021, Bilibili gave a clear timetable for achieving profitability – Bilibili CFO Fan Xin said, “In 2022, we are confident that on the premise of maintaining healthy user growth, by improving The realization rate of a single MAU and the control of operating expenses will achieve a year-on-year reduction in the non-GAAP operating loss rate for the full year in 2022, and the medium-term goal is to achieve non-GAAP breakeven in 2024.”
But to break even within two years, the market is clearly not optimistic.
The financial report data for the first quarter of 2022 shows that the revenue and user growth of station B have slowed down significantly, and the amount of loss has increased significantly.
After the financial report was released, netizens ridiculed one after another. Station B truly interprets the phrase “everything is good, but no money is made”. There are also shareholders who said that they could endure burning money, but the gross profit also declined, and the model of station B did not work at all.
Against the background of continuous expansion of losses, inefficient commercialization, and continuous decline in stock prices, the anxiety of station B has become more and more obvious.
On the one hand, the scale growth of Station B has slowed down and entered the stage of commercial realization; on the other hand, it is also the pressure of the capital market.
Since this year, Station B has been looking for new growth points and accelerating commercialization.
On the one hand, the recent drastic and continuous optimization of the commercialization system is manifested in major changes in core business and persons in charge; on the other hand, it is testing the waters of paid video, intending to find a new profit growth curve.
Can young executives get the upper hand, can station B get rid of losses?
Recently, a new round of major adjustments have been carried out by several core departments and persons in charge of Station B. The focus of adjustment is still on the commercialization part.
For a long time, the commercialized middle-office system has been the core section of Station B, which includes the Commercial Product Department, Commercial Technology Department, Commercial Operation Department, and Commercial Resource Management Department. In this major adjustment of Station B, the entire commercialized middle-office system of Station B and the business of the main station commercial center have been transferred to Liu Zhi, Vice President of Station B.
Liu Zhi used to be the first employee of the commercialization team at Station B, and this transfer also clearly shows that Station B is trying to make the commercial middle office play a more important role in driving all kinds of growth.
At the same time, Liu Binxin, the original person in charge of these two businesses and vice president of Station B, announced his resignation.
After Liu Zhi was transferred to focus on the commercialization system, Wang Yuyang, the vice president and head of the live broadcast business, took over the business of the main station operation center that he was originally in charge of. That is to say, Wang Yuyang is currently in charge of the reporting line of the main station operation center, the creative platform department, the community operation department and the content cooperation department.
Another business of station B commercialization, the marketing center, is in charge of the general manager Wang Xu. Zhang Zhendong, the business leader and vice president of the original Mengpai and marketing center, was transferred to the innovative business.
It is understood that Liu Zhi, Wang Yuyang, and Xu Bei are all young executives who have grown up from the front line at station B. Wang Yuyang is also the youngest post-90s executive at station B, who is only 30 years old this year.
After this adjustment, Liu Zhi and Wang Xu, the two direct leaders who are responsible for the commercialization of Station B, both report to Li Ni, Vice Chairman and COO of Station B.
Li Ni is the core leader of the commercialization and content business of Bilibili, the first person in charge of the commercialization department, and has built a self-made content system at Bilibili.
As we all know, the vast majority of Internet companies currently adopt a collective decision-making system. For example, Ali’s partner, Tencent’s president’s office, and Meituan’s S-team. Station B is different. So far, the company’s decision-making power is still mainly concentrated on Chen Rui and Li Ni.
This major adjustment focusing on the commercialization sector further demonstrates that Station B is accelerating the commercialization in an all-round way and is eager to get rid of the loss-making situation.
However, can these young executives take the commercialization of Station B and walk out of different fireworks?
As early as 2020, station B has airborne many vice presidents and business leaders, trying to get rid of the limitations of the main station’s inability to radically grow and commercialize. These airborne bins include Zhang Zhendong, Liu Binxin, and Wang Yuyang.
In April 2020, Liu Binxin, as one of the many vice presidents airborne at Station B, has been in charge of the commercial advertisements of Station B since he took office. It is reported that he worked at Baidu for eight years before, and was the deputy director of Baidu Fengchao, responsible for search advertising; since 2017, he has served as the assistant to the president of Qihoo 360, and is responsible for 360’s commercial products and technology-related work.
And Zhang Zhendong started a little earlier than Liu Binxin. At the beginning of 2020, Zhang Zhendong joined Bilibili as the vice president and head of the commercial marketing center.
Up to now, Zhang Zhendong and Liu Binxin, the two vice presidents, have only been in station B for more than two years since they abdicated and transferred their posts in a hurry.
In the past two years, the loss of station B has not improved, but has expanded. Obviously, Station B is not satisfied with the commercialization results in the past two years.
However, in contrast, Wang Yuyang, an airborne soldier, walked more and more solidly at Station B.
For a long time, the commercialization of station B has been deeply dependent on the game business, but the game is a project with long investment and unstable returns. At this time, station B realized that it must expand new business to change this kind of business. income structure.
The live broadcast has been designated as the most important business development by station B. That is, at this time, Wang Yuyang joined station B and became the head of the live broadcast division, reporting to Chen Rui. After joining Bilibili, he led the main station live broadcast center to exceed the company’s performance for two consecutive years, and at the same time participated in the management of some operational affairs through the special zone project of the “Game Content Department”.
At the beginning of this year, Wang Yuyang was promoted to vice president. Up to now, the reporting lines of the main station operation center, the creation platform department, the community operation department and the content cooperation department have all been moved to him. Obviously, station B has high hopes for it.
Having said that, with the changes of executives at this time, for Station B, which has never been profitable, can it achieve the expected goal of breakeven in 2024?
Overall, it seems a bit difficult.
Test the water paid video model, causing a lot of controversy
Experimenting with paid videos and accelerating the continuous attempts in content ecology, product form and monetization method can be said to be a move of Station B to explore commercialization this year.
However, in recent months, the attempts at station B have been particularly intensive, and the response has been mixed.
On June 20th, the UP master of station B hooked up the old man Duncan to upload the “Top Ten Unsolved Mysteries in the World” series, which requires users to spend 30 yuan to purchase the collection to watch, becoming the first paid-to-view video from the UP master at station B.
Duncan himself explained below the video that trying to pay is to “increase income for small groups”, so as to expand production capacity and do more interesting things. He said that the 10 paid videos will be updated at a rhythm of 1-2 issues per month, and the updates will be completed within the year.
After the video was released, doubts such as excessive pricing, harvesting leeks, and insufficient originality of the content continued. Some people think that paid videos are unreasonable, and buying a big membership is buying a loneliness; some people think that paid videos are overcharged, and the program quality and charging standards do not match.
In addition, many users still questioned the launch of the paid video model at Bilibili. Station B currently has members and major members, and “paid viewing” appears after the major members, so it seems that it is not meaningful to open a member.
That is to say, this kind of paid content collection mode for all users to charge indiscriminately, for large members, it means that on the basis of paying to watch OGV content, further payment is required to be able to watch some UGC content, which is equivalent to reducing the rights of major members.
Leifeng.com learned that from the “Bilibili Paid Content Purchase Agreement” on the purchase page, it seems that Station B is only an information exchange platform for UP main paid content transactions, and does not make any promises about the transaction effects of UP main video collections. Not involved in the transaction process. The agreement states that consumers should negotiate with the UP host to resolve disputes or disputes arising from the collection of UP’s main paid content.
For Bilibili, the free culture and the community atmosphere that is highly dependent on user satisfaction have also brought business realization into a deadlock and made Bilibili’s situation even more embarrassing.
It is worth noting that this is not the first time that Station B has tried content payment. As early as 2019, station B officially launched the classroom channel of station B, and the first batch of online paid courses involved English, postgraduate entrance examination and other fields; in 2020, after the explosion of knowledge area content, station B cooperated with famous teachers such as Luo Xiang to launch paid courses.
From the payment for knowledge to the payment for the content of the video created by the UP master, many people in the outside world believe that this is another step taken by the B station in the commercialization of content.
At present, more and more platforms such as Douyin and iQiyi have opened the paid subscription function.
For Internet companies, content payment has long become one of the most important profit models for Internet platforms after advertising and e-commerce, from TV drama membership, to paying for reading books, paying for listening to music, and then trying to pay for short-form dramas on short video platforms.
However, content payment has been controversial for a long time.
This test of the water has made the contradiction between the commercial realization and user experience of station B re-emerged. Facing the pressure of loss and the controversy of “cutting leeks”, station B has not yet found a balance point.
Objectively speaking, it is indeed a problem for station B to quickly find a monetization model that suits you, while maintaining the original community ecology.
CEO Chen Rui sets the tone, “control” the money
The growth rate has slowed down significantly, and the increase in costs and expenses is much higher than the revenue growth rate. For station B, which is still in a loss state, it is simply worse.
At the 2021 financial report meeting, CEO Chen Rui made it clear that Station B will enter a stage of reducing costs and increasing efficiency. “Control all the money that should not be spent, and at the same time increase the efficiency of the money that should be spent.”
There is no doubt that under the environment of “cost reduction and efficiency increase” of Internet companies, station B has also begun to lay off staff.
In February this year, station B was exposed to layoffs in the game department, calling the layoffs “graduation day” and the resignation process as the “bilibili graduation day” guidelines for various matters.
The rectification of the live broadcast department with high costs seems to have become inevitable.
By April, it was reported that the live broadcast business department of Station B was planning to lay off staff, and a preliminary list had been drawn up, which would spread to the entire live broadcast department. In May, news came out that station B started a new round of layoffs, and the hardest hit area was the game business. Employees said that the overall layoff ratio of the game business reached 20%-30%, of which individual projects reached 70%.
In fact, between the end of last year and the beginning of this year, news of layoffs has been reported in the game business of Station B. Internal employees said that the new round of layoffs started in May, among which the proportion of self-developed game projects was relatively high, and only a few of them were retained.
In addition, according to Caixin news, a number of B station employees confirmed that B station has started a round of layoffs since mid-May, mainly focusing on games, live broadcasting and commercialization. The employees revealed that according to the estimate of the number of employees leaving the department, the optimized business department has a layoff ratio of about 20%, while the main site of station B, which is responsible for user growth, is less affected.
In addition, in March of this year, the creation incentive plan of station B was revised, and many UP owners reported that the creation incentive has shrunk significantly, or even “halved”.
According to media statistics, if the video playback volume of top bloggers can be stabilized at several million times, the creation incentive of station B in 2020 can reach 30,000-40,000 yuan / month, but this year, the income of each video is only a few hundred dollars.
From the shrinking of anchor incentives to the rumors of layoffs in the live broadcast and game business, it can be seen that station B is determined to reduce costs and increase efficiency, and stop the loss-burning business in time. The outside world also regards this move as a move by Station B to control costs.
For station B, while the profit problem is difficult to solve, learning to save money is also the way the company must take.
Under the military order, the loss did not shrink, but further expanded
Station B is not a short-term loss in the near future, but has been in a state of loss for a long time.
Financial data shows that from 2015 to 2021, the net losses of station B were 569 million yuan, 1.185 billion yuan, 572 million yuan, 616 million yuan, 1.289 billion yuan, 3.012 billion yuan, and 6.789 billion yuan. In 7 years, the company’s net loss totaled 14.032 billion yuan.
Especially in the past three years, the loss has expanded by a large margin. In 2021, the loss of station B will be 6.789 billion yuan, which is double the loss of 3.012 billion yuan in 2020.
Under the huge revenue pressure, Station B must find new profit growth points.
In March of this year, Chen Rui, chairman and CEO of Station B, said that in 2022, under the premise of maintaining healthy user growth, the strategic focus of Station B will focus on accelerating the commercialization process and further reducing costs and increasing efficiency, which is planned to be realized in 2024. breakeven.
After the profit target was proposed, the loss of station B expanded instead.
On June 9, Station B announced its financial report for the first quarter of 2022. Both revenue and user growth slowed down significantly, but the amount of losses increased significantly.
According to the financial report, the total net revenue of Station B was 5.0541 billion yuan (about 797.3 million US dollars), an increase of 29.5% compared with the same period of the previous year. The net loss was 2.2841 billion yuan (about 360.3 million U.S. dollars), compared with a net loss of 904.9 million yuan in the same period last year, and the loss increased by more than 152% year-on-year. Even the adjusted non-GAAP net loss is as high as 1.655 billion yuan, a sharp increase of 86% from the loss of 891 million yuan in the same period in 2021.
From the perspective of revenue growth, Station B has become slower and slower, and the growth rate in the first quarter is far less than the 61% growth rate for the whole year of 2021.
Flush iFinD data shows that from 2016 to 2020, the revenue growth rate of station B was 299.49%, 371.7%, 67.27%, 64.16% and 77.03% respectively. In 2021, the total revenue of station B will be 19.384 billion yuan, with a year-on-year growth rate of 61.54%, the lowest level in the past six years.
In terms of cost, from 2019 to 2021, the marketing, administrative, and R&D expenditures of Station B will almost double every year. In 2018, 2019, and 2020, the content cost of station B was 543 million yuan, 1.002 billion yuan, and 1.876 billion yuan, respectively. In 2021, the content cost increased to 2.695 billion yuan.
From the perspective of revenue structure, value-added services, games, e-commerce, and advertising are the four pillars of Station B. As the mainstay of Station B’s revenue and the largest basic market for commercialization – the growth rate of the game business continues to slow down. The growth rate of Q1 in 2022 is only 16%, and the proportion of overall revenue has dropped from nearly 80% to 26%.
And since 2021, game regulation will become stricter, the growth rate of value-added services will slow down, the contribution of games and value-added services to station B will be further reduced, and the advertising business has become the biggest growth engine.
In the first quarter of 2021, the advertising business of station B increased by 234% year-on-year, the most dazzling among the four major sectors. But in the first quarter of 2022, the advertising business grew by only 46% year-on-year.
As for the e-commerce business, the revenue growth rate has also dropped sharply from 230% in the first quarter of 2021. By the first quarter of this year, the e-commerce and others of station B have only increased by 16% year-on-year.
According to Huxiu reports, the e-commerce business of station B can only be a jump transaction of e-commerce advertisements. Judging from the current traffic distribution mechanism and operation ability of station B, its exploration of the business model of e-commerce business will not be too much. depth.
Obviously, advertising and games are the business with the highest gross profit margin, but the growth rate of these two businesses slowed down month-on-month, weakening the company’s gross profit level.
According to a late report, Station B tried to increase the advertising loading rate through Story-Mode and OTT large-screen terminals, and encouraged UP hosts to convert to anchors, thereby earning revenue through live broadcasts and advertisements. However, the average age of users at station B is 22.8 years old, and the age range falls between undergraduate graduation and newcomers, and their spending power is not strong.
In addition, as early as 2014, Xu Yi, the founder of Bilibili, publicly stated: “Bilibili’s genuine new program will never add patch advertisements”, and Chen Rui once said that Bilibili may go bankrupt in the future, but it will never deteriorate. This sentence is intended to emphasize the continuity of Bilibili’s video without advertising, but it has also become a high wall that hinders the commercialization of Bilibili.
Station B itself is different from other video sites that insert massive advertisements in the title and in the film, so it is impossible to make money directly from the amount of video playback. Posting advertisements rashly is likely to arouse users’ disgust, so they can only use the information stream to push advertisements carefully.
From the perspective of the overall environment, with the disappearance of the demographic dividend of the consumer Internet, high-speed user growth and traffic monetization have been difficult to reproduce, and it is difficult to have commercial breakthroughs other than games, advertising and e-commerce.
To be precise, the future B station will face greater challenges in terms of business logic.
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