Analysis of Bilibili's Competitive Strategy in the New Trends

. According to the "2022-2027 China Internet Video Industry Market Depth Research and Investment Strategy Forecast Report" published by the China Research Institute of Industry, as of the end of June 2021, the size of China's Internet users broke one billion, reaching 1.011 billion people, an increase of 0.22 billion people compared to the end of December 2020, the massive size of Internet users to promote the development of China's online video industry. The size of the short video market will increase more quickly between 2020 and 2022, with a compound annual growth rate of about 44%. The market size will grow at a slower rate during 2023-2025, but will still maintain a CAGR of 16%. China's short video market is expected to reach nearly 600 billion yuan in 2025 [1]. More than a quarter of a day is spent watching short videos on mobile devices in China. Along with visuals and audio, short video has emerged as the "third language" of the mobile Internet. Short-form video has rapidly increased in the new Internet economy. Bilibili's future development has attracted much attention. With the development of the Internet economy and the increase in significant video websites, whether Bilibili can continue its competitive advantage and successfully achieve business transformation has become controversial. This research will analyse Bilibili's business model through a SWOT analysis and make feasible suggestions for its future development.


Research Background
The new trend in the development of video websites in 2022 is "cost reduction and efficiency enhancement", which to a large extent reflects the end of the long-standing crude business model of video websites and the beginning of a new phase in the industry's cold winter, i.e. from the pursuit of share to the purpose of profit. The transformation also follows this trend, i.e. when the user growth cycle comes to an end, Bilibili will start a new commercial growth cycle, including opening a series of value-added services, boosting its advertising inventory and increasing the volume of games it represents, and aims to help Bilibili achieve profitability through this transformation. However, according to Bilibili's first quarter earnings report released on 9 June 2022, gross margins have fallen for five consecutive quarters, which means that Bilibili's commercial transformation has lost into a strange circle of "increasing revenue without increasing profits". This paper will analyse Bilibili's development strategy and business model and discuss how Bilibili should adjust its competitive strategy during its business transformation to achieve profitability while maintaining its competitive advantage.

Literature Review
According to data provider Quest-Mobile Mobile's Internet Q2 Summer 2017 Report, Bilibili was ranked first among the top 10 APPs used by young people under the age of 24. Meanwhile, Bilibili was placed first among the top 10 recently followed APPs for the post-00s in Baidu's 2016 Hot Search List [2]. Bilibili's successful business model is attributed to its competitive strategy. According to Peng (2019), the function of pop-ups distinguishes Bilibili websites from other video viewing platforms. It gives it a social attribute that leads to its unique community culture [3].
With the advent of this interface, online video consumption has undergone a dramatic transition that has over time evolved into a distinctive cultural phenomena in the Chinese digital domain. Kress and van Leeuwen (2002) have also studied the colour of pop-ups, showing that coloured pop-up comments can represent different types of video content, fulfilling a conceptual function while reflecting the interpersonal part of community culture [4]. This achieves a technical innovation among video sites and gives Bilibili a relative advantage, a differentiating feature, over the similar competition. In addition to the pop-up culture, With so many people who are actively using it, Bilibili draws in commercial marketers. According to Yang (2018), the platform draws top-notch video makers in two ways: a special recommendation system and a service for protecting intellectual property [5]. These two features demonstrate how Bilibili, in opposed to other platforms, prioritizes the rights of video artists. Bilibili stands out among other video platforms as the go-to option for inexperienced content makers because to its pro-creator ecosystem. However, Bilibili's competitive advantage is not sufficient to provide it with a sustainable and stable profit margin; as Chen Bai (2022) commented in Economic Observer, judging from the financial data, the buying power of the secondary niche circle is limited, and Bilibili-site has still not found a sustainable business model [6]. Bilibili has abandoned its patch ads, but there are no innovative marketing models that can replace them -neither paid content nor the many attempts at vertical screens seem to have had the desired effect so far. The greatest strength of Bilibili is its ability to bring together and attract young people. However, young people's preferences are constantly changing. The core issue that Bilibili needs to address in its transformation is whether it can continue to produce content that matches its preferences and find a way to commercialise it that is not offensive to young people.

Research Significance
The purpose of this paper is to review Bilibili's development history, summarise its competitive advantages and disadvantages, and provide recommendations on the challenges and dilemmas facing Bilibili's commercial transformation under new circumstances. It is hoped that this will help the company better understand the current competitive landscape and its strengths and weaknesses to make better improvements. In addition, it can also provide some implications for the future development direction of other video platforms.

Overview Of Bilibili's Development
Bilibili's platform business model is shown in the figure below.

UGC Creation In The Secondary Genre (2009-2013)
Founded in June 2009, Bilibili focused on updating fanzines in terms of content. Its pop-up chat service function quickly attracted many high-quality ACG enthusiasts to Bilibili, gradually building up a highly vertical secondary yuan community.
Some of these enthusiasts also desired to create their videos while receiving information on the Bilibili platform. They became uploaders, creating various types of video works mainly in the secondary yuan field and uploading them to Bilibili, forming a good community culture of content creation and sharing.

From UGC To PGC (2013-2018)
In 2013, Bilibili opened registration and underwent a revamp, reducing the proportion of new content and gradually enriching its content. At that time, registered users of Bilibili were required to pass an entrance exam before sending interactive behaviours such as pop-ups and comments. This registration threshold ensured the quality of interaction on the site to a certain extent, which was conducive to forming a good community atmosphere and prepared sufficient community conditions for expanding content into the pan-secondary field. 2013-2015 saw Bilibili undergo content creation. From 2013 to 2015, Bilibili transformed its content creation from the subculture of secondary gen to the pan-secondary gen field and from UGC to PGC (Professional Generated Content).

Highly Professional User Generated Content (PUCG) Phase (2018-present)
Bilibili was placed on the NASDAQ stock market in the US in March 2018 and gradually began its "circle-breaking" plan. In May 2018, Bilibili launched its promotional film "The Back Wave", vigorously promoting breaking the circle of users and making Bilibili's brand image reach a broader age group of users. In 2020, Bilibili focused on producing and promoting outstanding PGC film and TV variety content; Bilibili's 2020-2021 National Creation Conference announced that 33 new animated works would be launched; the "2020 Most Beautiful Night Bilibili Party" jointly held by Bilibili and CCTV was broadcasted up to 150 million times [6]. At this stage, Bilibili attracted users (uploaders) with quality content centred on PUGV (medium videos) and retained them with a vibrant community atmosphere. Users on the Bilibili platform connected over the content and the same hobbies. In February 2018, Bilibili launched a creator incentive programme and training activities for different levels of uploaders; in July, Bilibili announced the start of internal testing of its e-commerce function. Bilibili's current realisation models mainly include mobile games, live streaming, membership services, advertising, e-commerce, etc. Bilibili is focusing on increasing the degree of service transactions, advancing the commercialisation process and developing into a balanced content and transaction platform enterprise.

Adopted differentiation strategy
The key distinction between Bilibili pop-up video sites and conventional video sites is that Bilibili has the ability to provide realtime trolling. It makes all internet users less lonely and enables them to view videos on their own to spread knowledge. The secondary cultural style of ACG is distinctive. The cornerstone of Bilibili's standing is ACG culture. Such non-mainstream cultural websites are now scarce in China.
In contrast, there are few well-produced products. ACG Culture is one of Bilibili's main strengths and weaknesses. Because of the low acceptance of ACG culture, the reach of site B users is lower than that of users of other video sites. This makes B's popularity unparalleled by other video sites. Also, unlike major video sites with unique self-produced content (e.g. Akiyay's "Oddball" and Tencent Video's "Creation 101"), Bilibili has relatively little self-produced range. Most of Bilibili's content is used for shipping and user-created, and there are essentially no official Bilibili-published videos.

High user stickiness
As a gathering place for secondary yuan culture, the user stickiness of the Bilibili video site is much higher than other sites in the same genre. The secondary ACG culture community currently has the most monthly active users, and it provides a wealth of unique and authentic fan drama materials. There are also a variety of high-quality multi-popularised videos produced by many uploaders, which makes it sticky for users. The lack of patch ads in the videos also enhances the user's viewing experience, but this is not conducive to closing the commercial loop of the platform, making it difficult for Bilibili to enter a virtuous cycle of purchasing exclusive rights and revenue, making it necessary for Bilibili to achieve profitability in areas other than advertising. This dramatically increases the threshold for registration, improves the quality of users and the quality of the pop-ups, and is beneficial to maintaining the moral development of the community.

Limited profit channels
As mentioned above, the absence of patch ads in Bilibili's videos makes its advertising revenue relatively small, which is not conducive to closing the commercial loop of the platform, and it is difficult for Bilibili to enter a virtuous cycle by purchasing exclusive rights and revenues. Bilibili's ecommerce business involves hand-me-downs, peripherals, comic book shows, performances, models and other secondary yuan merchandise. It has transformed into a self-operated e-commerce business, having channelled traffic to Taobao in the early days. Today, it operates as a self-contained ecommerce company, creating upstream and downstream channels. Live streaming and e-commerce, however, are still in their infancy and provide a very tiny amount of money.

Video quality varies
Bilibili has invited many uploaders to join the platform and encouraged more self-publishers to publish original video content through its creator incentive programme. Still, the increase in the volume of videos has also brought uneven quality. However, as Bilibili continues to diversify its range, with more and more users of all ages and other platforms coming in, it may become increasingly difficult for the former core users of Bilibili to maintain the content environment of Bilibili. In addition, secondary creation and removal of videos from Bilibili can involve copyright disputes. Some of the content created in the Ghostbusters section constitutes an infringement of the rights of those involved, such as their portrait rights. Therefore, Bilibili's administrators need to scrutinise the content of video creations.

Stable consumer base
Compared to other content communities, Bilibili's primary users are the "Generation Z" generation, i.e. those born between 1990 and 2009. By the end of the previous year, over 82% of Bilibili users, predominantly secondary school and university students, who had grown up with the Internet, were Gen Z users, according to Quest-Mobile figures. Users of Bili are concentrated in first-and secondtier cities and are eager to pay [7]. Statistics from Bilibili show that pupils in North China's universities and high schools, Shanghai and Guangzhou make up half of Bilibili's users. The young and energetic user groups with high creative and expressive abilities and a strong sense of payment have become the leading group for Bilibili's innovation and consumption. The favorable growth of Bilibili's platform business model, which is helpful for the widespread adoption of the brand, has been facilitated by the growing consumption potential and willingness to pay in first-and second-tier cities.

Game industry development
The majority of Bilibili's traffic has been realized via agency and collaborative gaming operations, which account for 50% of Bilibili's revenue. The gaming business of Bilibili accounted for 31% of total income in 2022, second only to VAS. Revenue from the gaming business at Bilibili was 1.17 billion yuan in the first quarter, up 2% from the same period last year. in April 2022, Bilibili invested in two game companies, XinDong and China HandYour, and now holds 4.72% of XinDong and 7.15% of China HandYour [8].
Bilibili may expand its gaming business footprint by actively investing in external gaming companies. b station CEO Chen Rui said, "I think there is much room for future development and growth in the gaming industry, and it has the potential to grow at a multiplier, so we attach great importance to the gaming sector." B Station has also started experimenting with different categories and distribution methods to create more realisation opportunities and commercialisation value in the game sector. In terms of both quantity and quality of users, the partnership between secondary hand game distribution and vertical channels continues to outperform conventional game distribution (app stores, PeaPod, etc.) This enables games to reach users more precisely and meet customers' needs.

Fierce competition in the video website market
With the rise of secondary yuan culture, other video platforms have also started to compete with Bilibili for the rights to new shows. In 2017, Tencent Video and Akiyay continued to increase their investment in anime rights, with many popular shows of the season being bought out by the two, making Bilibili unable to broadcast. When users cannot watch their favourite anime on Bilibili, many users will naturally flow to Akiyip and Tencent Video. When the parties cannot maintain an even playing field, a break in supply occurs, and Bilibili is forced to face the resulting loss of subscribers.

Profit and loss not yet balanced
While Bilibili's profitability is improving, losses are still growing, a $565 million net loss in 2018 and a $1,304 million net loss in 2019. Although the market is now positive on Bilibili, the capital market will unavoidably start to become cautious following two black swan incidents, namely RuiXing and the new crown pandemic. If the losses continue to grow, the stock market may get impatient, which may ultimately result in the share price falling. One of the main foundations of income for Bilibili will be the live streaming sector, is again facing fierce competition, with platforms such as Tiktok and Hu Ya monopolising the top anchors. At the same time, it isn't easy to profit from live streaming, and it remains a significant challenge for Bilibili to make a return or even a profit on the live streams in which it has invested much money.

Encourage Users To Create Short Videos
According to data from CEO Chen Rui in June 2021, 91% of Bilibili's videos are created by uploaders, commonly known as PUGC content. Of this, 45% belongs to pan-knowledge content, and this knowledge-related content is Bilibili's veritable mainstream content [9]. With pan-knowledge short videos occupying an important position in the overall market, many video software platforms such as Watermelon Video, Watch Video and Jitterbug have started to support pan-knowledge short videos. In Bilibili's transformation strategy, a critical step toward the vertical screen era is to improve the quality of fast video creation, respond to market demand and maintain its competitive advantage over similar products. The unique nature of knowledge-based short videos also requires Bilibili to bring in many knowledgeable people as head anchors. In an era when everyone can become a knowledge producer, the authority of knowledge can be questioned, so videos in which professionals share their expertise with the public in front of the camera have been widely welcomed. By inviting authoritative experts to the science section, Bilibili not only raises the overall academic level of the knowledge section but also guarantees the quality and authority of the videos.

Strengthen The Supervision Of Creative Content
In recent years, the relevant departments have repeatedly urged the removal of online animation products and related videos with illegal content and dealt with controversial issues appropriately. Bilibili has also been requested to conduct a comprehensive check of criminal and undesirable information and strengthen the audit of videos, live content, comics, graphics, related pop-ups, and follow-up comments. With the increase in the number of self-publishing authors and the expansion of the Bilibili community following the generalisation of entertainment, the increase in creative content means that Bilibili needs to strengthen its monitoring of creative content if it is to maintain the quality of its original videos. In addition, many secondary creative videos may involve infringement of the copyright of the original, which also needs to be monitored and maintained by Bilibili community administrators.

Key Findings
Reading the previous research that other academics have done on Bilibili's competitors over the last several years has provided motivation for this article. This research indicates, via a review of Bilibili's competitive strategy, that the primary obstacles in Bilibili's business transformation process are, first and foremost, weighed down by the external environment. These findings are presented in this article. On the one hand, there is the weakness that was seen in the online advertising market during the first quarter, as well as the influence that the pandemic had on the business of e-commerce. But what's more essential is that the commercialization system is still being built. Soaring game development costs and continually high revenue-sharing fees are the expenditures that are preventing Bilibili from getting "out of the red." In addition to increasing its investments in game creation and live gaming, Bilibili has to find new ways to generate revenue, such as expanding its advertising offerings and adding more premium video content. On the other hand, despite the fact that it is in the early phases of its business transformation, Bilibili is facing a number of obstacles, it is also facing a number of possibilities. As was discussed above, one of Bilibili's major assets is the company's highly engaged user base, which also contributes to its strong customer loyalty and consistent spending levels. It is an urgent matter that needs to be addressed during the process of transformation, and that is how to respond to the shifting needs of Generation Z in light of new trends and make Bilibili accessible to a wider user base while maintaining its original community culture attributes. Both of these things are important.

Future Outlook
As for the possibility of Bilibili continuing to "break the circle" in terms of user types in the future, an Internet industry researcher told Punch News, Bilibili is clearly developing its post-80s audience and sinking market, such as the cooperation with UGC content has a natural ability to break the circle, but it is slow [10]. Occasional new categories of content gain recognition, bringing in new pockets of traffic, bringing in more creators, and so on to break the circle." Since 2019, when Bilibili launched its "break the circle" strategy, the company has been following a "content-user-cash" development logic, with Bilibili placing a higher priority on user growth and a results-oriented approach. Bilibili's rapid expansion has also reminded the company of the need to further strengthen its infrastructure to enhance content diversity and attract diverse users, for example by creating PUGV (Professional User Generated Video). Professional User Generated Video (PUGV), Story-Mode vertical video, smart TV terminal and other multi-scene, multi-terminal video ecology to meet the needs of users to access quality content anytime, anywhere. The high growth expectations of Bilibili's business are now reflected in its advertising, value-added services and gaming businesses. With the gradual improvement of Bilibili's infrastructure, the development of B-site will also become more refined and grow more rapidly. It is expected to achieve the development target of 400 million monthly active users by 2023.