Will Bilibili abandon gaming fanbase to fight ByteDance, Tencent?

Long before the launch of Douyin, China’s most popular short-video app, Bilibili was already dubbed the “YouTube of China,” thanks to its success in the video-sharing and streaming market. It has stuck around for 15 years in such a competitive market, which is no mean feat.

However, the Nasdaq-listed firm is facing increasing competition, including from much larger players like TikTok’s parent company ByteDance and internet and tech company Tencent. This may force Bilibili to move away from its specialized strategy so it has the scale to compete going forward.

Photo credit: Koroti K / Shutterstock

Bilibili says it is aiming to break even in the third quarter of 2024 after narrowing its losses to US$83.7 million in the second quarter. The firm has enjoyed strong growth in the past five years, reaching more than 300 million monthly active users (MAUs) in 2023 and growing its revenue to 22 billion yuan (US$3.1 billion) that year compared to 523 million yuan (US$74 million) in 2016.

But that still leaves Bilibili at about half the users and even less in revenue compared to ByteDance and Tencent.

This is a problem for a niche player like Bilibili, and the firm may already be shifting its strategy to the mass market to compete.

Niche strategy

At its core, Bilibili is a video-sharing platform business, similar to YouTube and TikTok. It was founded as a web page in 2009 and had a clever focus from the start.

In the fight for eyeballs, video remains the most powerful tool, as video now makes up 58.8% of the average time per day spent on social networks, up from 48% just three years ago.

Video-sharing platforms have a powerful business model. Just ask YouTube and TikTok. It is worth noting, however, that Bilibili has stood out since its beginnings. It wasn’t a general-purpose video-sharing platform business like YouTube. Instead, its content was focused on anime, comics, and gaming (ACG) categories, which have enthusiastic and dedicated fans.

See also: Why PDD’s earnings miss will slow Temu’s SEA expansion

Then Bilibili added livestreaming, which is a solid extension into a new video type. Since then, it has also expanded into other related businesses, including mobile gaming. It launched a video game digital distribution service and storefront, akin to Steam, and started producing original videos. Think of it as Netflix but focused on anime, comic books, and audio content.

Over time, Bilibili has built a suite of services to add to its core offering and serve its unique user demographic. That is considered a classic approach used by new digital businesses, which typically consists of the following steps:

1. A new digital tool enables a superior service to emerge. This is used to break into an existing business, often causing an unbundling of the current offerings.
2. Existing value chains get transformed, and everyone scrambles to grab the valuable positions.
3. The new leaders add services, complements, and bundles.

Bilibili became an early mover in video sharing, landing an attractive position in its field. So, what’s the problem?

Keeping up with the Joneses

Change already begun?

A ubiquitous utility