Content platforms are becoming popular all over the world, especially in China. As a content platform, Bilibili’s story shows the development process of content platforms in emerging economies. This research explores the content of Bilibili at different stages of development from the perspective of business model, and tries to show a new growth path for enterprises in emerging economies. This research finds that in the three development stages of Bilibili, the nine elements of business model presented different characteristics and were combined into three distinct models. This study provides a reference for the theory and practice of the growth of emerging economies and the evolution of business models.
The content platforms in China are flourishing. In recent years, the number of content platforms has increased; there are content platforms such as iQIYI, Youku and Tencent for TV drama fans, Douyin (Tiktok in China) and Kuaishou for people from “the lower class”, Renren Video which almost monopolized all foreign TV series and Bilibili for young people. However, content platforms are facing such challenges as intensified competition in the industry, high user requirements for the platform’s functions, diversified user needs, high cost in attracting more customers, and low user stickiness. At the same time, the platform’s customers are beginning to accept paid services as an opportunity for content platforms to grow and expand.
The development of content platforms in China, an emerging economy country, is different from their western counterparts. Most content platforms in China are involved in derivative businesses such as games and e-commerce, and all platforms have bullet screens as instant tools for customer interaction to increase customer stickiness. (Bullet Screen is an emerging new feature on online video sites in China and Japan, which allows real-time comments from viewers to fly across the screen like bullets.) YouTube, the world’s largest video site, has little of that. Thus, content platform in emerging economy is more complicated. This article focuses on the development of content platforms in emerging economy.
The development of content platforms in emerging economy is related to elements in association with industry and enterprise interfaces, such as value proposition, resource integration and channel, etc. The interfaces of company and industry can be characterized by the concept of business model. Therefore, I’ll try to analyze the business model of content platforms in emerging economy.
Bilibili, as a rising star among content platforms in China, has only experienced 12 years of development and become a must-see website for young people in China. Its story well presents the entire development process of a content platform in emerging economy. This paper will take Bilibili as a case, and discuss the business model evolution of content platform in emerging economy, so as to contribute to the research of business model evolution in emerging economies, and provide new insights for the study of content platforms.
Although there is a lack of consensus on the definition of business models (Bigelow et al., 2021), Magretta (2002)’s basic understanding of business models is widely accepted. She defined business model as the stories that explain how enterprises work. Osterwalder (2004) defined the business model as the translation of a company’s strategy into a blueprint of how the company earns money and pointed out that the concept is more holistic that embraces all such elements as pricing mechanisms, customer relationships, partnering and revenue sharing.
There are several major perspectives on business model research. Firstly, the institute-based view (Wruk et al., 2019) believes that business model of the company needs to be consistent with legitimation strategies and social expectations. Secondly, organizational design (Zott & Amit, 2007; Anderson, 2016) researchers use organizational factors to explain the success of the business model. These researches try to analyze business models in element level, while mine tries to use the business model canvas proposed by Osterwalder (2004), which is a combination of elements.
There are relatively few studies on business model evolution. Based on the 1950-2021 search results on Web of Science (Search time: June 14, 2021), only 20 articles had “business model evolution” in the title, and 41 articles had it as a topic. The reason might be that business model evolution research needs to involve a large number of elements and evidence, and the mutual coordination between the elements. Balboni et al. (2019) introduced the whole process of business model transformation in three different stages, from start-up to change in design themes of novelty design to combinative effect of efficiency and novelty. Fritscher & Pigneur (2014) introduced how the method of business model canvas should be applied to the study of business model evolution. I follow their ideas.
According to Hoskisson et al. (2000), an emerging economy can be defined as a country that satisfies two criteria: a rapid pace of economic development, and government policies favoring economic liberalization and the adoption of a free-market system (Arnold & Quelch, 1998). Obviously, China is an emerging economy.
Transition economy is a similar concept to emerging economy. It refers to the rapidly growing countries of Central and Eastern Europe that emerged after the collapse of the Soviet Union in 1989 (Hoskisson et al., 2000). These countries have shifted from socialist economy to market economy, and their governments are willing to strengthen their market mechanisms through liberalization, stabilization, and the encouragement of private enterprises (Hoskisson et al., 2000). China is also a transition economy. The emerging economy has some clear characteristics. Firstly, these countries lack the well-defined property rights that convey exclusivity, transferability, and quality of title (Devlin, Grafton, & Rowlands, 1998). Secondly, the emerging economy has a strong dynamic characteristic. Thirdly, the politic, economic and institutional environment in these countries is unstable, which may have a significant impact on the development of economies. Fourthly, these countries are lack of strong legal frameworks so that opportunism, rent shifting, bribery, and corruption are more popular (Nelson, Tillery, & Walker, 1998). Fifthly, the development of market institutions has been slower and more difficult. Sixthly, emerging economies are heterogeneous even in the same geographic region.
Content platform is a new thing. Extant researches focus on issues such as user contribution performance (Son, 2016) or consumers’ use and self-investment trajectories (Linden et al., 2020). Other researches focus on analyzing the content provided by content platforms or the mode of content upgrading or the commercialization of content (e.g. Chen et al., 2018; Zeng, 2019).
This paper adopts a single case study method. Eisenhardt (1989) pointed out that case study can be very useful when we know little about the problem being studied or try to start from a new perspective. This research chooses Bilibili as the single case because the case is typical which meets the application conditions of the theory in all aspects, and is suitable to the application of the exploration of new study fields. Bilibili is a content platform in China, an emerging economy market country, and it thrived after going through a business model evolution process. Actually, there is few foreign content platforms with such operational model that contains bullet screen and derivative business as Bilibili, which is also novel in China.
Bilibili is a video platform for the young generation in China. Founded on June 26, 2009, it is affectionately known as “B Zhan” by fans. On March 28, 2018, Bilibili was listed on Nasdaq; on March 29, 2021, it had a second listing in Hong Kong, China. Bilibili was an ACG (animation, comic, game) content creation and video sharing site in its early days. After 12 years’ development, the company has built a content ecosystem for users and content creators, and has developed into a multicultural community covering more than 7000 interest circles. Bilibili had about 223 million monthly active users in the first quarter of 2021.
I have collected data about Bilibili’s history, subsidiaries, related companies, organizational structure, corporate operation status (including revenue, users and paying users, changes in main business structure, stock price information), industry information and institutional environment, main founders and managers, and major partnerships in recent years. Data sources are Bilibili’s annual reports and online public data such as Baidu, public interviews, and corporate resources from Qichacha, etc. The data are collected from Bilibili’s founding year of 2009 to May 7, 2021. The history of the enterprise is shown in
| Time | Event | Significance |
|---|---|---|
| June 26, 2009 | Founded (with the name “Mikufans”, officially changed its name to Bilibili on January 24, 2010). | First well-developed ACG bullet-screen website in China. |
| November 2014 | Rui Chen joined Bilibili as a partner, and served as the chairman of the board. | Signal to commercializing. |
| 2014 | Bought the first original Japanese animation Tiejin Pu’an Family. Bought the copyright of the famous animation series Fate/Stay Night Unlimited Blade Works. | Possession of the original version of the Japanese animation series has gradually become the symbol of Bilibili. |
| November 26, 2014 | Set up its Japanese branch, Bilibili Co., Ltd. | Trying to enter the Japan market. |
| November 27, 2014 | Bilibiliyoo was set up, officially launched customized travel services to Japan. | Trying to offer travel services. |
| November 23, 2015 | Bilibili Pictures was founded. | Entering the film industry. |
| January 4, 2016 | Bilibili Pictures’ first film, Sherlock Special: The Abominable Bride, was released. | The film produced by Bilibili entered the market for the first time. |
| September 23, 2016 | Announced that they are the exclusive agency of mobile game Fate/Grand Order in China. | Signal for business model transformation. |
| 2016 | Bilibili was awarded Top Ten Documentary Presenters in China by the 4th China Documentary Presenters Conference. | Documentaries began to prosper. |
| March 3, 2017 | Bilibili’s official blog posted an article which showed its courage to protect the rights and interests of the original content creators. | Began to emphasize intellectual property rights of uploaders, hoping to improve the stickiness of content creators. |
| March 28, 2018 | Listed on Nasdaq under the stock code BILI. | Bilibili can raise more funds to provide financial support for its operation, and may attract more overseas fans to Bilibili, also may make some of its functions and interface settings similar to excellent foreign mainstream medias. |
| September 17, 2018 | Bilibili announced the in-depth cooperation with the Discovery Channel and they will open up a “Discovery Channel Section” on Bilibili platform, including introducing 145 documentaries and planning to co-produce documentaries with the Discovery Channel. | Aiming at improving the quality of its documentaries. |
|---|---|---|
| December 6, 2019 | Announced the acquirement of the exclusive live-broadcasting rights of League of Legends Global Finals S10 to S12 in China from 2020 to 2022. | Hoping to have a larger share in the live-broadcasting market. |
| March 29, 2021 | Went to Hong Kong, China for a second listing, stock code SW09626. | More funds can be raised to support the development of the platform, and can stimulate China investors’ enthusiasm for investing in Bilibili. |
Note: “uploaders” here refers to the content creators on Bilibili’s platform. The meaning of “uploaders” in following texts is the same.
| Year | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Net revenues | 130,996,000 | 523,310,000 | 2,468,449,000 | 4,128,931,000 | 6,777,922,000 | 11,998,976,000 | |||||
| Gross profit | −172,572,000 | −249,502,000 | 549,208,000 | 855,438,000 | 1,190,249,000 | 2,840,176,000 | |||||
| Key Components of Results of Operations | Mobile games | 342,382,000 | 2,058,226,000 | 2,936,331,000 | 3,597,809,000 | 4,803,382,000 | |||||
| 65.4% | 83.4% | 71.1% | 53.1% | 40.0% | |||||||
| Value-added services | 79,656,000 | 176,443,000 | 585,643,000 | 1,641,043,000 | 3,845,663,000 | ||||||
| 15.2% | 7.1% | 14.2% | 24.2% | 32.0% | |||||||
| Advertising | 60,727,000 | 159,160,000 | 463,490,000 | 817,016,000 | 1,842,772,000 | ||||||
| 11.6% | 6.5% | 11.2% | 12.1% | 15.4% | |||||||
| E-commerce and others | 40,545,000 | 74,620,000 | 143,467,000 | 722,054,000 | 1,507,159,000 | ||||||
| 7.8% | 3.0% | 3.5% | 10.6% | 12.6% | |||||||
| Monthly active user (in millions) | 87 | 117.5 | 185.8 | ||||||||
| Q1 | Q2 | Q1 | Q2 | Q1 | Q2 | Q1 | Q2 | ||||
| 57.29 | 65.47 | 77.45 | 85.04 | 101.3 | 110.4 | 172.4 | 171.6 | ||||
| Q3 | Q4 | Q3 | Q4 | Q3 | Q4 | Q3 | Q4 | ||||
| 73.93 | 71.75 | 92.74 | 92.76 | 127.9 | 130.3 | 197.2 | 202 | ||||
| Average monthly paying users (in millions) | Q1 | Q2 | Q1 | Q2 | Q1 | Q2 | Q1 | Q2 | |||
| 0.8536 | 1.0727 | 2.4725 | 2.9662 | 5.7 | 6.3 | 13.4 | 12.9 | ||||
| Q3 | Q4 | Q3 | Q4 | Q3 | Q4 | Q3 | Q4 | ||||
| 1.174 | 1.1089 | 3.5402 | 4.4158 | 7.9 | 8.8 | 15 | 17.9 | ||||
| Average monthly revenue per paying user | Q1 | Q2 | Q1 | Q2 | Q1 | Q2 | Q1 | Q2 | |||
| 151.2 | 165.6 | 105.7 | 102.2 | 67.6 | 66.4 | 48.3 | 53.8 | ||||
| Q3 | Q4 | Q3 | Q4 | Q3 | Q4 | Q3 | Q4 | ||||
| 182.7 | 201.7 | 86.0 | 69.0 | 58.1 | 54.5 | 50.1 | 44.2 | ||||
| Average monthly paying users for mobile games (in millions) | Q1 | Q2 | Q1 | Q2 | Q1 | Q2 | |||||
| 0.463 | 0.5858 | 0.8299 | 0.8174 | 1.0232 | 0.9713 | ||||||
| Q3 | Q4 | Q3 | Q4 | Q3 | Q4 | ||||||
| 0.7436 | 0.6446 | 0.9139 | 0.8791 | 1.4606 | 1.256 | ||||||
| Average monthly revenue per paying user for mobile games | Q1 | Q2 | Q1 | Q2 | Q1 | Q2 | |||
|---|---|---|---|---|---|---|---|---|---|
| 251.3 | 279.7 | 276.5 | 322.6 | 284.6 | 315.7 | ||||
| Q3 | Q4 | Q3 | Q4 | Q3 | Q4 | ||||
| 269.0 | 319.3 | 271.4 | 270.3 | 213.0 | 231.3 | ||||
| Sales and marketing expenses | 3,029,000 | 3,423,000 | 11,499,000 | 14,269,000 | 40,808,000 | ||||
| total cost of revenues | 772,812,000 | 1,919,241,000 | 3,273,493,000 | 5,587,673,000 | 9,158,800,000 | ||||
Source: Bilibili Annual Report 2018-2020. Note: The average monthly paying users in the table not only includes the fee of premium membership program, but also includes sales of in-channel virtual items for use in live broadcasting so that users can send them to hosts to show their support, which comprise of either consumable items, such as gifts and items that create special visual effects, or time-based items, such as privileges and titles. Those who spend money on Bilibili Comics and Mao’er FM are all Bilibili paying users. And the vacant parts in the table are missing data in Bilibili annual report.
All the data concerning Bilibili’s profitability (net revenues and gross profit), key activities (key components of results of operations), monthly active users and revenue earned from these users (and the data about average monthly paying users for mobile games are also included), sales and marketing expenses and total cost of revenues are shown in
This research uses the nine elements proposed by Osterwalder (2004)’s business model canvas as variables to analyze Bilibili’s business model evolution from 2009 to present, and summarizes the elements of a company’s business model into nine elements under the four pillars (see
According to the evolution of contents provided by Bilibili, this study divided Bilibili’s business model evolution into three stages, the self-entertaining mode from 2009 to 2013, the trial-and-error mode from 2014 to 2016, and the consolidation and promotion mode from 2017 to now. This paper will use the Business Model Canvas to analyze the four pillars of business model in different phases.
In terms of value proposition, Bilibili was originally founded to provide users with a high-quality bullet-screen video website. During this period, because of the lack of supervision, the content was mainly plagiarized from other websites and resources, and it only targeted on young and low-end (“low-end” here refers to the low consumption will and affordability) ACG lovers. Bilibili aimed to improve and optimize the existing basic functions. For example, on August 10, 2009, Yi Xu, founder of Bilibili, launched a video titled Special Bullet-Screen Test. Till April 22, 2010, Bilibili had almost completed the bullet screen management system development. Bilibili started as a website that plagiarized Japanese animations to cater for the interests of ACG lovers and the function optimizations of its platform was rather scarce (the Special Bullet-Screen Test video
| Pillar | Element | Variable Measurement |
|---|---|---|
| Product and Service | Value Proposition | Value propositions can be divided into high-end, mid-end and low-end. Value proposition can be analyzed from the perspectives of how value is created, value level, price level and customer buying cycle. |
| Customer Interface | Customer Relationship | The customer relationship begins with defining who the customer is, how to define the relationship with the customer, and how to maintain the relationship. |
| Customer Segments | Distinguished by what segment of customers the company wants to offer value to. | |
| Channel | The channel can be analyzed from the perspective of the four marketing strategies of “product, price, channel and promotion”, or the reason why the channel creates value, or the channel satisfies which function of customer buying cycle. | |
| Infrastructure Management | Key Activities | The key activity of an enterprise can be roughly divided into three categories: manufacturing products, problem solving and platform/network. |
| Key Resources | Key resources are measured according to the categories of human resources, technical resources, market resources, etc. | |
| Key Partnership | The partnership is a voluntarily initiated cooperative agreement between two or more companies in order to create value for the customer. Partnerships can form beneficial networks. | |
| Financial Aspects | Cost Structure | It’s measured by the representation in money of all the means employed in the business model. |
| Revenue Stream | Revenue stream refers to the way a company makes money through a variety of revenue flows. |
to test the bullet-screen function and the completion of bullet screen management system development). Thus, I define the business model of Bilibili at this stage as a Self-entertaining Mode because the company mainly focused on ACG culture and catering for the users’ love for ACG culture.
In terms of customer relationship, at this stage, Bilibili mainly targeted on low-end users who are keen on ACG culture. The relationship between Bilibili and its customers can be simplified as content creators (i.e., uploaders) → Bilibili platform → fans who watch the videos uploaded by content creators. Both uploaders and their fans are Bilibili’s customers, and Bilibili is an intermediary platform connecting these customers. Bilibili mainly improved and optimized the existing basic functions of the website to maintain customer relationships. For example, users were allowed to delete or protect the videos they submitted. Bilibili also made timely adjustments based on user feedbacks. Besides, Bilibili strictly restricted videos with bad influence, pirated or plagiarized videos and videos with poor picture quality. From the perspective of customer segments, Bilibili mainly concentrated on ACG lovers. In terms of channels, Bilibili developed some channels at this stage, but did not carry out in-depth development of these established channels. For example, on April 14, 2013, Bilibili’s Game Section was officially established. However, it only launched a handful of games in 2013, one of which was Daybreak, but it is no longer available for downloading in mobile app stores now.
In terms of key activities, at this stage Bilibili provided its users with animations and encouraged uploaders to make creative videos. In terms of key partnership, there was only low-level cooperation with some technical personnel. Rui Chen, chairman of Bilibili since 2014, recalled his meeting with Yi Xu (founder of Bilibili) in 2011: “At that time, Xu and several other co-founders were all in their early 20s, crammed into an apartment with a monthly rent of ¥3000 RMB in Hangzhou without any investment.” From the view of key resources, it invested resources to optimize the website and the bullet screen function. For example, Bilibili has carried out a series of website optimizations: on June 14, 2010, it improved the function of real-time bullet screen chat; on June 23, 2010, it added tag function.
From the perspective of revenue, Bilibili had almost no revenue from 2009 to 2013, which can be inferred from the fact that all the data in Bilibili’s annual report started from 2015. In terms of cost structure, the cost was probably mainly spent on optimizing and upgrading the server and on buying a better server.
In terms of value proposition, Bilibili wanted to enter the mid-end and high-end market promptly during this period in order to transform Bilibili into a full spectrum video community covering a wide range of content categories and diversified video consumption scenarios. From 2014 to 2016, Bilibili made some moves that had a positive impact on the company. For example, Bilibili bought the copyright of some animation series in 2014. However, Bilibili has also undergone lots of trial-and-error. In 2014, after Rui Chen joined, Bilibili made some aggressive operations and investment, as shown in
At the same time, Bilibili’s strategy was also greatly influenced by institutions. From late 2014 to early 2015, Bilibili was involved in a number of lawsuits concerning the infringement of the rights to spread information online filed by iQIYI, Douyu and Huashi Wangju etc. Yet Bilibili survived and even thrived through these intellectual property right violations.
Since March 2015, the Ministry of Culture in China has remedied some violent and terrorist cartoons on the Internet, focusing on the animation products that induce crime, violence, pornography and terrorist activities. A large number of animations were banned because of violating of these regulations. In June 2015, a list of companies that had violated the “Internet Audiovisual Program Service Management Regulations” or “Interim Provisions on Internet Culture Management” to provide animation products with illegal contents was released, and Kuan Yu Digital Technology was a company on that list. Within the organizational structure of Bilibili, Shanghai Kuan Yu Digital Technology is a subsidiary of Hode Shanghai Limited. In other words, in 2015, Bilibili’s online audio-visual services were given a heavy blow by these regulations. At that time, Bilibili deleted some of the animations, but also continued to provide banned animations by renaming them (such as renaming Assassination Classroom, which was banned, as Class E, Year Three).
| Time | Event | Reason |
|---|---|---|
| November 26, 2014 | Set up a Japan branch shortly after Rui Chen joined. | 1) On November 26, 2010, someone posted Bilibili’s link on a Japanese Forum called 2ch, Japanses users began to know about Bilibili. 2) Bilibili ambitiously entered the market in Japan when Rui Chen had only become a member of Bilibili for less than a month, this means that BiliBili wants to cooperate better with the copyright holders and service providers in Japan. |
| 2014-2015 | A company called “Bilibiliyoo” was founded on November 27, 2014, and then Bilibili officially launched a customized tourism project to Japan for those who love ACG culture. Bilibili tried to provide exclusive tourism planning and promotion services for their customers, such as leading them to Akihabara to buy cartoon figures and going on a parade to where some animations got inspirations from, etc. The price of this trip is ¥5400 RMB, including visa, round-trip airplane tickets, accommodation and tickets to scenic spots. The service was later suspended and the Sina microblog of this project stopped updating since April 16, 2016. | 1) China’s ACG tourism industry was not mature. 2) Bilibili was still in infancy stage, there may be some problems with the operation of this tourism project, this service was probably not very profitable. |
| 2015-2016 | On November 23, 2015, Bilibili Pictures was established. On January 4, 2016, Bilibili Pictures’ first co-produced film Sherlock Special: The Abominable Bride was released, the cumulative box office of this movie in China was ¥161 million RMB. On August 19, 2016, the fantasy animation film the Elf Throne was released, Bilibili Pictures was the co-producer of this movie. This movie had a cumulative box office of ¥2.589 million RMB. (Bilibili Pictures owns the intellectual property of this film.) On December 16, 2016, the movie I Repair Cultural Relics in the Forbidden City was released. Bilibili Pictures was one of the co-producers. This movie’s cumulative box office was ¥6.458 million RMB. Results: Bilibili Pictures suffered from deficits. According to Shanghai United Equity Exchange, Bilibili Pictures had no revenue until May 2017. | 1) Sherlock Special: The Abominable Bride is made for a relatively small group of people who have watched the British TV series Sherlock, this film is too complicated for the general public to understand. 2) The Elf Throne only had fine pictures, the plots of this movie were cliche and there was nothing creative to attract the audience. 3) I Repair Cultural Relics in the Forbidden City was thought to be a cut from the same documentary, it was sloppily made and not a sincere work. Besides, there were problems about the cinema’s film arrangement. |
This reflects the transition of emerging economies, changing from lacking a strong legal framework to the gradual establishment of a well-developed policy and regulatory system.
It also suggests that perhaps Bilibili was seeking to change its strategies and seeking better development due to the change of supervision and regulation on content platforms. However, as an emerging economy enterprise, Bilibili lacked resources and capabilities. There was no doubt that Bilibili couldn’t achieve the leap to mid-end and high-end market.
In terms of customer relationship, Bilibili’s customer relationship was still based on the good relationship with the content creators and their fans. Specifically, in October 2014, a system called B Coin went online to please the uploaders, users can send B coins to uploaders to show their support, which can be transformed into uploaders’ actual monetary income. The actions to please the fans who watch videos on Bilibili’s website were: in 2015, Bilibiliyoo launched a tourism project to Japan; in December 2015, the official Taobao store of Bilibili was opened for business; on September 23, 2016, Bilibili announced that they are the exclusive agency of mobile game Fate/Grand Order in China; in 2016, Bilibili Pictures released three films.
From the perspective of customer segments, at this stage, Bilibili’s target customers were relatively out of order. The launch of tourism projects was aimed at high-end users who have the ability to pay, while the operation of B coin system, the opening of official Taobao stores and participation in the production of movies were aimed at mid-end and low-end users who have relatively low affordability.
In terms of channels, Bilibili’s sales channels were also in dreadful disorder. From the cooperation between Bilibili and other channels in 2015, on April 25, 2015, Bilibili cooperated with Zhihu and became the partner to live-broadcast the grand annual event “Zhihu Salt Club”; on June 28, Bilibili cooperated with Baidu. A voice search for “I want + Bilibili memes” would redirect users to watch relevant videos on Bilibili. Besides, Bilibili and Sina organized the “Chinese Animation Month” event together in December, 2015. Zhihu is aimed at higher-end intellectuals with more knowledge and cultural awareness, while Baidu and Sina microblog are applications for mid-end and low-end users to search and browse news and anecdotes, which shows the disorderliness of Bilibili’s channel.
The key activities of Bilibili in this stage are shown in
Key partnership at this time is shown in
Therefore, the key resources of Bilibili at this stage were in a mess. Not only did Bilibili need the resources to maintain the operation of various activities (such as tourism, film and documentary), but also acquired resources through cooperation with other content platforms and enterprises.
In terms of cost structure, the cost structure of Bilibili at this stage is shown in the following
It can be seen from