Since Bilibili Inc. (Bilibili Inc.) held the 2019-2020 party, the share price has risen more than 23%, and the market capitalization has stood above the $7 billion mark.

So, Bilibili Inc., who successfully broke the circle, how high is the ceiling?

1. Bilibili Inc. will become the next generation mainstream video community.

(1) Bilibili Inc. is more public than Kuaishou Technology, more social than Douyin and younger than Weibo Corp.

In terms of content and traffic, Bilibili Inc. is more public than Kuaishou Technology, more social than Douyin, and more similar to Weibo Corp. And Bilibili Inc. content tone and users are younger than Weibo Corp, user growth is also more ferocious.

(2) vigorously support the master of UP to form a closed-loop ecology

Bilibili Inc. 's video content can be divided into two categories according to its source, namely PUGV (UP's main creative video) and OGV (copyrighted content and platform-made video). At present, Bilibili Inc. 's PUGV content accounts for nearly 90% of the broadcast volume, which is the core component of its video content.

In order to support the original content ecology of its platform, Bilibili Inc. pays attention to the comprehensive support to UP owners, provides UP owners with an upward, fulfilling and positive original ecology, and creates a solid content barrier for Bilibili Inc..

At present, Bilibili Inc. platform has formed a closed-loop ecology of "UP master-content-user": UP master has generated a large number of PUG video supply through creation, while users as PUG video audience will encourage UP master to continue to create.

(3) the community atmosphere is good, and the user stickiness is Bilibili Inc. chassis.

Bilibili Inc. has a higher membership access mechanism (answer exam), becoming a member can send a barrage in the video. On the one hand, the warm on-screen comment gives UP great feedback and encouragement; on the other hand, it is also the second creation of the whole video, which adds icing on the cake to the video content and strengthens the interactive enthusiasm of users.

For long video platforms such as Aiyou Teng, users will flock to the platform that owns the copyright of head dramas and variety shows. These platforms are partial to tool attributes. Bilibili Inc. 's user stickiness is the recognition of the UP master, the sense of participation in the secondary creation, and the dependence on the multicultural community. The difference between tools and communities makes the content investment of long video platform more like cost, while Bilibili Inc. 's content investment more like assets, which is Bilibili Inc. 's chassis that is difficult to replace.

To sum up, Bilibili Inc. may be the next generation of mainstream video community.

2. The broken circle of content promotes the expansion of users, and the small broken station enters a big era.

(1) content已Not limited to ACG

Today, Bilibili Inc. 's content, lifestyle and entertainment have surpassed ACG content to the top of the list. The more and more diversified content touches more and more mainstream Internet crowd, let the small broken station enter the big era.

(2) the rapid growth of users

Bilibili Inc. content to increase the intensity of the circle, so that user growth is natural. Compared horizontally with other pan-entertainment platforms, only Bilibili Inc., Douyin and Kuaishou Technology can achieve MAU growth of more than 30% in 2019, while other pan-entertainment platforms such as Weibo Corp, iQIYI, Inc., Tencent Video and Youku have only single-digit MAU growth.

With the continuous broken circle of content and the active support of user access strategy, the number of Bilibili Inc. users will enter the fast track of growth in the next few years, and MAU is expected to exceed 250 million by 2022.

Generation Z (those born in 1995-2009) accounts for more than 80 per cent of Bilibili Inc. users. With Generation Z gradually becoming the mainstream of society, users' disposable income and spending power are expected to continue to improve, optimistic about Bilibili Inc. 's commercialization potential after the users break the circle.

3. Long-term commercialization may be highly open by advertising.

（1）bilibiliHow to choose the path: private domain such as Kuaishou Technology or public domain such as Douyin

The private domain is realized, such as Kuaishou Technology, making full use of his private fan relationship to help him realize, and the platform can take a percentage of his reward and commission in the future. Public domain realization, such as Douyin, emphasizes popular style content recommendations rather than personal recommendations for authors, and strengthens advertising cash flow by strengthening platform-level traffic.

In the long run, Bilibili Inc. is more likely to cash in the public domain for the following reasons:

Scale space: the size of the live broadcast industry is 100 billion in 2019, while the size of the online advertising market is over 500 billion.

Profitability: the stickiness and profit margin of the live broadcast platform are thin, while the profit margin of the advertising model represented by Weibo Corp is considerable.

Content attribute: Bilibili Inc. 's core content ecology is composed of massive PUGV videos, and more traffic comes from the public domain level of the platform, which is more suitable for the public domain cash mode of advertising.

(2) Live broadcastEarn income in the short term and attract users in the long term

Prior to Bilibili Inc. 's live broadcast business, after the anchor became famous, it was easy to lose to other head platforms, mainly due to the lack of traffic and attraction of the live broadcast plate. So Bilibili Inc. carried out a series of operations on the live broadcast: the game live broadcast snatched the three-year broadcast right of League of Legends's global finals, and Feng Timo, the former DouYu International Holdings Limited anchor, signed a contract in the live show, and so on. All these show Bilibili Inc. 's determination to transform the "novice village".

Due to the low barriers to live streaming business, through the above actions, more and more Krypton fans will come to Bilibili Inc. to promote the number of reward users and ARPPU. We believe that Bilibili Inc. can first catch up with DouYu International Holdings Limited as the small goal of the live broadcast business.

(3) Advertising room for improvement.Vast

Bilibili Inc., as a content platform that is famous for its public domain traffic, currently has the largest cash space for advertising:

Space of scale: the size of domestic online advertising is 480 billion in 2018, and we expect it to be about 580 billion in 2019.

Feasibility of the model: short video advertising is a mature way to realize cash, as proved by the success of Douyin and Kuaishou Technology. Bilibili Inc. has a large amount of short video content ecology, which is suitable for short video advertising.

Platform attribute: Bilibili Inc. is more of a community with content as the core, realizing more space for the commercialization of public domain traffic.

The effect of advertising transformation determines advertising revenue. Generally speaking, the more mature the advertising technology of a platform and the more accurate the recommendation matching, the higher the advertising conversion rate, the advertising unit price that the platform can charge, and the total revenue will be higher. In this respect, the input and layout of the byte beat system in which Douyin is located far exceeds that of Weibo Corp and Bilibili Inc..

It is precisely because of the gap in technology that there is a significant gap in advertising loading rate and advertising unit price, resulting in a huge gap in advertising revenue.

Bilibili Inc. 's current eCPM advertising price of less than 10 yuan, compared with Douyin, still has dozens of times of growth space; in the full set of advertising technology and sales system still need to be improved. It is gratifying to note that Bilibili Inc. has invested heavily in data mining, algorithm investment, creative material optimization and other fields.

If Bilibili Inc. 's user traffic grows in a broken circle, we think its commercialization level can reach the height of Weibo Corp. In the long run, if Bilibili Inc. can achieve great improvement in the advertising algorithm system, then its commercialization and valuation are expected to reach a broader height.

(4) sustained and steady growth of games, members and e-commerce

In terms of games, the regulation of the game industry has warmed up since 2019, the game version number has been restarted and issued, and the prosperity of the industry has been gradually upward. According to Bilibili Inc. 's official website game center, Bilibili Inc. currently has 30 new games, and Bilibili Inc. 's game revenue is expected to accelerate growth in 2020.

In terms of members, although there is still a certain gap between Bilibili Inc. 's paid penetration rate and the long video platform based on PGC content, Bilibili Inc. 's current movies and TV dramas have less content, and there is still room to improve the paid penetration rate in the future as content procurement continues to increase.

In terms of e-commerce, Bilibili Inc. 's core products are "member purchases", which are mainly sold by hands, fashion games, peripherals, etc., with an e-commerce GMV of about 1 billion in the first three quarters and sales and commission income of about 446 million, a six-fold increase over the same period last year. In addition, Bilibili Inc. is currently working with BABA to carry out UP main e-commerce advertising, by the UP main choice of goods with goods recommendation, charge CPS share. At present, Bilibili Inc. chooses to return part of the platform CPS to the UP master, and the future platform is worth looking forward to in the form of CPS e-commerce advertising or annual frame advertising.

On the whole, when Bilibili Inc. achieves the broken growth of users, its commercialization space and market capitalization can be comparable to Weibo Corp. When Bilibili Inc. in the user growth at the same time, including data, algorithms, material design and other dimensions of the advertising technology system greatly improved, then its commercialization space and market value prospects will be more broad.