(Chinese Version)

Not long ago, Zhihu announced that the company had received an investment of 55 million dollars led by Tencent in its series C round of funding. And in recent days, rumors have been spreading that Tencent is also investing in video-sharing platform Bilibili. From Zhihu to Bilibili, what exactly is Tencent is planning?

Perfecting its layout in the social networking sector and content platforms to further enhance its position on the battlefield

• The social networking sector

The relationship between people is the foundation of social networking products. As a result, social networking products’ life cycle changes according to the ever-changing social relationship among users. When we are using a brand new social networking product on which all the friends we have added are actually total strangers, we might eventually leave the platform due to the lack of connection. However, sometimes it could work the other way around as well. For instance, if we have our boss, managers, or directors at work on our WeChat, we might turn to other platforms to complain about work. Similarly, when we get sick, we usually don’t want to post our condition on WeChat where our parents could see. In this case, when we have too many connections on those most frequently used products like WeChat, we might transfer some of our content to alternative platforms. Just imagine all those users looking for a new platform and they would eventually settle on one. And when that time comes, a new giant social networking platform is born. Apparently, in the eyes of Tencent, Zhihu and Bilibili have the most potential.

In the initial period, Zhihu adopted the invitation system, meaning also potential users that received invitation from Zhihu were able to register on Zhihu’s platform. And thanks to this very invitation system, during that early period every Zhihu user was an expert in a certain area. User could even ask researchers studying the Antarctic questions like what it’s like to live in the Antarctic as well as asking millionaires in the business world about things related to financial management. At first, verified users on Zhihu gradually formed a strong connection through different clubs on Zhihu and WeChat groups. And after Zhihu was finally open to the general public for register, its user base quickly expanded to ten million. Later on, even though Zhihu started to face issues such as overly-fragmented answers and questions, the platform was able to improve the user experience by launching information filtering products such Zhihu Daily and Dudu Daily which integrated functions like content filtering, columns, and content social networking in one. Additionally, the Groups feature which looks like Instagram, also contributes greatly to Zhihu’s penetration in the social networking world and the platform is utilizing its PGC characteristic and large user base to further expand. Compared to Dudu Daily which is designed for high-end users, Groups’ threshold for social networking is much lower and is more down-to-earth.

Bilibili is a video-sharing community with a high user retention rate, which sets the platform apart from the crowd. Bilibili has a unique feature that most video-sharing websites do not possess, and that’s the bulletin subtitles. Many industry insiders of the Internet sector believe the bulletin subtitle feature is the main reasone for Bilibili’s success. If we take a deeper look at this special function we would find that it’s not merely just function that allows users to show their comments on the video, but also a social networking behavior.

Bilibili has three groups of users: some like to leave bulletin comments on the video which serve as subtitles; some leave bulletin comments at certain time of the videos and seek communication with other users; and others like to use the bulletin function to talk to other users that are also watching the video with them. These users will actually watch the videos once again after leaving their bulletin comments just to see other users’ response and feedback. Communication and response are definitely the characteristics of social behavior. Besides that, Bilibili’s community is growing more connected than ever. For Bilibili users, the bulletin comment function is not just a tool, but also a culture, which is something that other video-sharing sites can’t compete with.

When society divides people into different groups in accordance with the generations, for example, the post-90s, that’s when the barnum effect comes into play. Especially when society gives the post-90s more and more labels, this effect grows more obvious. The Barnum effect is the observation that individuals will give high accuracy ratings to descriptions of their personality that supposedly are tailored specifically for them, but are in fact vague and general enough to apply to a wide range of people. For instance, some people believe in astrology tend to alter their personality towards the characteristics described in astrology even if some descriptions are obviously overly general. The same thing can be said to describe Bilibili users: when Bilibili users discover new shows they like, they would probably go watch them all over again on Bilibili just to see if there’s anyone on the platform shares the same opinions about the shows. If they do find that some people agree with their ideas, they are actually receiving positive feedbacks from others, meaning a boost in confidence. In this case, Bilibili is empowered by the Barnum effect and is able to attain a higher user retention rate. And a platform with a high user retention rate is exactly what Tencent has been looking for all the time.

• The content sector

Tencent has always wanted to use Tiantian Kuaibao to make something out of the news feed platform sector. However, the common circle of a news event basically takes place on three platforms: it starts on Weibo, trend on WeChat, and it’s concluded on Zhihu. Verified users on Zhihu can write in-depth analysis on news events and spark heated discussions, which is the unique advantage that Zhihu has. What’s more, WeChat’s official accounts can act as information filters and push interesting articles that people do care to users. Early this year, WeChat released strict regulations and standards for the content, recommendation, and sharing behavior of WeChat official accounts, in hopes of improving the quality of the content. WeChat itself doesn’t intervene the allocation of the Internet traffic, it only serves as a information platform. And the truth is that Zhihu could be a great complement to Tencent in terms of content.

At the beginning of this year, Bilibili’s hot animation One Hundred Thousand Bad Jokes did an extremely great job in box office performance, getting 119 million RMB in the end. That being said, One Hundred Thousand Bad Jokes is the third Chinese animation that has a box office of over one hundred million RMB along side with Pleasant Goat and Big Big Wolf and Bonnie bear. If Tencent could connect its film company and Tencent Comic with Bilibili and form a close loop, then Tencent is definitely going to have a say in the future Chinese animation sector.

Furthermore, Bilibili participated in the production of MIHOYO 2, Love Live!, Happyelements and God’s Blade etc., among which MIHOYO 2 was a tremendous success with over 50% of it profits coming from Bilibili’s android version, earning over ten million per month. To put it into perspective, its core data are 3 to 4 times higher than the average on the android market. For Tencent Interactive Entertainment, it’s like getting another vertical gaming content distribution channel, which is indeed a big plus.

It means more than you expected

There has been much discussion about ways to cash in for Zhihu. Zhihu itself also is experimenting the possibilities out there, including e-commerce (Zhihu recommended Liu Kanshan’s store on Taobao before).

At present, the e-commerce environment is becoming more complicated than ever. And it is for sure that bombing consumers with advertisements and appeal to them with low prices will no longer win over their trust and make them want to consume. The double eleven festival now is 7 years old and it’s reaching a bottleneck. It remains unknown whether its low price strategy and endless advertisements will work on the market in the future or not.

On the contrary, content community is giving new possibilities of consuming and its role in the business world is growing more significant. Content, at its nature, can help brands and business owners polish their products and make them more down-to-earth. Besides that, content communities are also social networking sites, meaning they have the capacity to spread information and, more importantly, the information about products. They are natural advertising platforms. WeChat’s official accounts have been a successful case where the official accounts were able to transform WeChat users into buying power with their posts. Content communities are platforms on which certain consumers that share the same consuming value get together and they serve as information filters. Such filtering capacity, based on grading from the content communities, is something big data can not achieve.

Zhihu’s professional content makes it an unmatchable player in its field. Verified users of Zhihu can answer questions like “how to differentiate different fabrics commonly used in clothes?” and “what kind of fabrics is considered as good?” etc. with a long article that might have over ten thousand words. With such profession information at disposal, consumers will be more willing to buy products as they feel that they are spending money on the right product.

Bilibili’s strength is its culture, and a sense of belonging among its users. Although Bilibili’s official store on Taobao so far hasn’t got an ideal sales performance, Bilibili still hasn’t decided to enter the anime figure sector. However, when Bilibili first launched the New Anime Contracting Project, the number of “contractors” reached 14,000 in a short time. To put it in perspective, Fate/Stay Night’s one episode alone had more contractors than its bulletin comments. Thanks for this project, Bilibili was able to get plenty of funding. Fate alone raised over 200 thousand RMB for Bilibili. There’s no doubt that this sense of belonging among Bilibili users can turn into an immense cash-in power. At present, Bilibili has opened its Japanese travel line even though its main purpose so far is take its users to a pilgrimage to Akihabara, but it’s fair to say that Bilibili has a promising future on its overseas layout built upon Japanese anime culture.

The rise of Xiaohongshu has got Jack Ma, CEO of China’s largest e-commerce platform, worried. And Tencent’s recent moves pose a threat to Alibaba’s position in the e-commerce world. Although Youku-Tudou and Weibo can bring great traffic to Alibaba, its advertisement-bombing nature still hasn’t changed much. That being said, perhaps one day Alibaba will find itself under siege even in the e-commerce sector, which is the very comfort zone of Alibaba.

[The article is published and edited with authorization from the author @MoChaoTongXue_visionary, please note source and hyperlink when reproduce.]

Translated by Garrett Lee (Senior Translator at ECHO), working for TMTpost.