SHANGHAI/TOKYO -- Explosive growth is almost an understatement for the Chinese video-sharing website Bilibili.
Bilibili's sales jumped nearly fivefold from 2016 to 2017. The company listed on the U.S. Nasdaq exchange in March and has a current market capitalization of $3.8 billion, miles above that of Kadokawa Dwango, operator of the similar Niconico video-sharing service in Japan.
By targeting the huge anime audience and offering a service where users can post videos and viewers can add comments, Bilibili has captured the eyes of younger generations in China and is in the running against the movie sites of China's internet titans, Alibaba Group Holding and Tencent Holdings.
Some 170,000 anime and computer game fans packed an event space in Shanghai for the annual Bilibili World event last weekend. "I watch Bilibili every day whenever I have the time," said one 21-year old college student at the scene, citing a particular fondness for its livestreams of anime cosplay performances.
Bilibili launched in 2009, delivering video content to smartphones and computers in a format that lets viewers overlay comments, just like Niconico.
Bilibili became popular because users would illegally post Japanese anime, and Chinese fans would use the comment feature to add Chinese subtitles. That is now mainly a thing of past, due to China's crackdown in support of copyright protection and Bilibili's own efforts to fight copyright infringement.
These days, Bilibili purchases licenses for the Japanese anime and other copyright content delivered on its platform. The company currently has copyright licenses for more than 2,500 Japanese anime titles, and it has joined the production side through investments in Japan.
"We don't just purchase licenses; we've set up a branch office in Japan and are participating in the production of Japanese anime," said Bilibili CEO Chen Rui in an interview with Nikkei.
China's major movie websites include Youku Tudou, which is part of the Alibaba group, and Tencent Video. But these are deep-pocketed concerns that focus on purchasing licenses for Hollywood blockbusters and the like.
In contrast, Bilibili focuses on posting livestreams and independent content by members living their dreams of getting into the medium. These users are the Bilibili equivalent of YouTubers, dressing up as anime characters to sing theme songs, or sharing video of smartphone games they are playing. The most popular livestreams have more than a million followers.
More than 90% of the videos delivered via Bilibili are independent content created and posted by such members. The service includes a mechanism whereby fans can send money as presents to posters, and Bilibili takes a cut off the top as a source of revenue.
"We are like YouTube and don't have any direct competitors in China," asserted Chen.
More than 80% of the people who use Bilibili were born in 1990 or later. The company has focused on this generation, which is willing and able to pay for anime and games.
Bilibili has gained such sway over young consumers that makers and retailers of consumer goods cannot afford to overlook the opportunities.
At Bilibili World in Shanghai, the U.S. consumer goods giants Nabisco and Procter & Gamble sold products themed on popular Bilibili characters. And Japanese convenience store chain Lawson is collaborating with Bilibili to open a store in Shanghai.
That said, Bilibili is still operating at a net loss due to upfront investments like anime copyright licenses. And smartphone games that are hit titles in Japan account for 80% of its sales.
The question for the company is whether it can become a business that generates a continual stream of revenues with its video operations.
Chen said that for now Bilibili will focus on its home turf of China, but the company views Southeast Asia as promising and may consider advancing into that market in the future.