Why ByteDance Must Acquire Bilibili
How the YouTube of China is being born.
I cover a lot of ChinaTech, stories that aren’t being told by the Western media. This is mostly for political reasons. The world doesn’t want you to know just how advanced China is, or what it’s building with its technological dynasty of platforms all working together.
China has a path to winning the attention economy for an entire generation. A generation that grew up on Douyin, Snapchat and even TikTok. ByteDance is the company behind TikTok and this is part of their likely story.
ByteDance must acquire Bilibili because their synergies are too great. Think about it, Bilibili is getting into gaming increasingly and getting into the TapTap platform in China.
Bilibili also is Gen-Z focused and is now at the number three spot. This platform is essentially the emerging YouTube of GenZ China. Bilbili’s stock has also been performing very well of late as revenues accelerate.
So how many users does it really have in 2021? Chinese video platform Bilibili hit a record of more than 65 million daily active users (DAUs), making it China’s third-largest long-form video site, following iQiyi and Tencent Video, Late Post reported (in Chinese) on Wednesday.
ByteDance has taken a hit with China’s crackdown on the education sector as ByteDance was on pace to become a major Ed-Tech giant of China. With the latest move it needed to fire a lot of its education staff. To compensate it may need to look into acquiring Bilbili. Bilibili’s format of viewing is more collaborative which fits into the GenZ psyche of how digital content is now being served.
Bilibili’s DAUs still lag behind short video platform rivals Douyin (TikTok’s Chinese version) and Kuaishou, which recorded 180 million in February and 295.3 million in the first quarter of this year, respectively. However Kuaishou appears to be a brand in a major decline in 2021, while Douyin is a different kind of animal altogether.
Bilibili’s DAUs rose 8.1% from 60.1 million in the first quarter.
The report also revealed that the average amount of time users spend on Bilibili exceeds 80 minutes, trailing Douyin’s 100 minutes.
TechNode’s data on Bilibili’s growth shows it’s retaining GenZ attention, just what ByteDance specializes in doing. And with its AI who knows what Bilibili could become, likely the YouTube of China which means huge Ad revenue.
GenZ is very niche and can be crazy in their “discretionary attention on mobile” for what they are into. A bit of history here. Founded in 2009, Bilibili initially attracted young Chinese internet users interested in animation, comics and gaming. The company has since evolved into a mainstream video site, as it diversified its content offerings and expanded its user base in recent years.
ByteDance could acquire Bilibili before it gets too much bigger and help it pivot to reach a more global audience, something the Chinese State would be in favor of doing. Bilibili have also shown ambition here. In 2020, the company set up a special department to expand its users base and scaled up investments in long-form video content, including TV shows, films and documentaries.
ByteDance is incredible at building things in-house but with state support it’s now time for it to acquire to accelerate its prospects before its Hong Kong 2022 IPO. Chatter about a ByteDance IPO seems like a constant rumor but I think it will occur in 2022 or 2023. According to a recent report from the Financial Times, ByteDance is still planning its public IPO on the HK stock exchange. Back in July, the Wall Street Journal reported the company had shelved its IPO plans.
Last year, ByteDance raised $5 billion from investors like Sequoia Capital and KKR & Co. It gave the Chinese company a valuation of around $180 billion. But China-based publication 36kr estimates ByteDance’s total valuation has soared past $400 billion. In a liquidity pumped era it’s hard to tell what a Unicorn is really worth, although ByteDance is likely in the $200 to $300 Billion territory in 2021. Acquiring Bilibili would be the next logical step for the company.
Bilibili has shown itself to be a very agile digital innovator and its content retention is as good as ByteDance’s and its overlap with GenZ, gaming and niche content is incredible. ByteDance is big enough to acquire Bilibili, which would be about a $42 Billion price tag.