Will a Red-Hot Bilibili Become Irresistible to Luxury Brands in 2022?

    Bilibili’s advertising revenue is one area to watch in the remainder of 2021 and into 2022, as more beauty and luxury brands eye the platform.
    Bilibili has evolved far beyond its early focus on the ACG (Anime, Comics, and Games) subculture, to draw hundreds of millions of mainstream users. Photo: Courtesy of Bilibili
      Published   in Finance

    Key Takeaways#

    • Video sharing site Bilibili reported a 72 percent increase in net revenue and a nearly 40 percent increase in average monthly active users in the second quarter of 2021 .
    • One of Bilibili’s key value propositions is its ability to leverage the trends that matter to younger consumers in China.
    • While beauty brands have successfully added Bilibili to their marketing mix, the young age of the average Bilibili user raises the question whether luxury brands might benefit as much.

    Although it was founded back in 2009, the Shanghai-based, Nasdaq-listed video sharing platform Bilibili has only gone mainstream in China over the past few years, attracting tens of millions of new users and the attention of brands across the consumer spectrum, from Shiseido to Mercedes-Benz. Bilibili’s continued rise has seen the platform surpass Youku to become the third-most popular video platform in China, trailing only iQiyi and Tencent Video.

    According to the company’s most recent earnings report, Bilibili’s total net revenue in the second quarter of 2021 reached RMB 4.49 billion ($696 million), a 72 percent increase from the same period in 2020. The platform also saw impressive user growth, with average monthly active users (MAUs) rising 38 percent year-on-year to 237 million.

    Bilibili’s famed stickiness has also been holding strong, with average daily active users (DAUs) reaching 62.7 million, a 24 percent increase over the same period in 2020. Perhaps most importantly for investors, Bilibili reported a 62 percent rise in paying subscribers (or average monthly paying users) to 20.9 million.

    As Jing Daily noted in our recent report,

    Chinese Cultural Consumers: The Future of Luxury#

    , one of Bilibili’s key value propositions is its ability to leverage the trends that matter to younger consumers in China. The platform has roots in China’s ACG (Anime, Comics, and Games) subculture, which has gone mainstream among young Chinese consumers, while it has also expanded into more general lifestyle categories such as food, travel, and fitness. With that ballooning user base has come a flood of investment by brands, especially in the tech, food and beverage, and sports sectors.

    China’s ACG community continues to grow steadily across multiple age groups. Source: Jing Daily, “Chinese Cultural Consumers: The Future of Luxury”

    Bilibili has also become one of China’s leading beauty marketing platforms thanks to its creators’ makeup tutorials, cosmetics reviews, unboxing videos, and more. From June 2020 to June 2021, the number of beauty brands with an official Bilibili presence saw a 20-fold increase, topping the list of official account categories.

    While luxury brands have been slower to invest in Bilibili, premium beauty brands have been more enthusiastic about its potential. Content-commerce powerhouse Shiseido produced a livestreamed product launch/variety show in May 2020 that racked up 1.34 million engagements and has continued hosting livestreams featuring Gen Z influencers and celebrities since then. Meanwhile, Chanel Beauty has invested in ads shown on the Bilibili opening screen and Lancôme has produced branded content in collaboration with Bilibili influencers. To facilitate brand involvement, Bilibili has launched a marketplace to connect its top creators with brands as well.

    Bilibili’s advertising revenue is one area to watch in the remainder of 2021 and into 2022. In the second quarter of this year, the company’s ad business reached RMB 1 billion ($162.5 million), an increase of 201 percent year-over-year, accounting for nearly a quarter of the company’s total net revenues. And like other popular Chinese social platforms, Bilibili continues to make an e-commerce push that premium and luxury brands should not ignore. In the second quarter of the year, Bilibili reported RMB 578 million ($89.5 million) in e-commerce revenue, primarily via sales of products through the company’s owned e-commerce platform, an increase of 195 percent from the same period in 2020.

    Bilibili has become a hotbed for makeup and beauty tutorials in recent years. Image: Screenshot

    The big question for the year ahead is whether Bilibili could become a stronger marketing and sales conduit for luxury brands outside of the beauty sector. Bilibili remains relatively untested for luxury, having only attracted a handful of early movers like Dior, Fendi, and Gucci to date.

    Although major brands and conglomerates will likely be watching Bilibili’s continued rise with interest, the platform — with its trademark free-for-all “bullet chats” flying across the screen as videos play — does not necessarily lend itself to luxury marketing, and much still needs to be done on the platform’s side to address user concerns about sexism. The spending power of Bilibili’s young user base is also cause for skepticism, since new users have an average age of 20, or nearly a decade younger than the average Chinese luxury consumer age of 28.

    In the year ahead, if Bilibili can prove its savvy at marketing higher-end brands and take meaningful action on sexism (while also staying on Beijing’s good side amid the current tech crackdown) we could very well see the platform become a new favorite for luxury brands angling to reach and influence the emerging Gen Z consumer.

    Chinese Cultural Consumers: The Future of Luxury#

    is available for purchase#

    on the Jing Daily reports page#


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