Good day, welcome to the Bilibili Q3 2022 financial results and business update conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Juliet Yang, Executive Director of Investor Relations. Please go ahead.
Thank you, operator. During this call, we'll discuss business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially from those mentioned in today's news release and in this discussion due to a number of risks and uncertainties, including those mentioned in our most recent filing with the SEC and Hong Kong Stock Exchange. The non-GAAP financial measures we provide are for comparison purpose only. Definition of these measures and a reconciliation table are available in the news release we issued earlier today. As a reminder, this conference is being recorded. In addition, an investor presentation and a webcast replay of this conference call will be available on the Bilibili IR website at ir.bilibili.com. Joining us today from Bilibili senior management are Mr. Rui Chen, Chairman of the Board and Chief Executive Officer, Ms. Carly Li, Vice Chairwoman of the Board and Chief Operating Officer, and Mr. Sam Fan, Chief Financial Officer. I will now turn the call over to Mr. Fan, who will read the prepared remarks on behalf of Mr. Chen.
Thank you, Juliet, and thank you everyone for participating in our Q3 2022 results conference call. I'm pleased to deliver today's opening remarks on behalf of Mr. Chen. Our community, which is the foundation of our business and key to our long-term success, continue to expand. In the Q3 , DAUs reached more than 90,000,000 , and MAUs nearly 333,000,000 , both up 25% year-over-year. Average daily time spent per user was 96 minutes in the Q3 , up eight minutes from the same period last year. With that, the total time spent on Bilibili grew by 37% year-over-year. Having said that, we still face macro headwinds and uncertainties that loom over the industry.
To cope with the challenging environment, we have reprioritized our goals and promoted to focus on two key tasks that will help us turn the corner. First, our users. As our MAUs have reached a sizable base of nearly 333,000,000 , we think it is time to shift our primary focus to DAU growth. DAUs not only represent the quality and the sustainability of our community, but also directly linked to our influential power as a platform, as well as various commercial prospects. Particularly in terms of revenue generation for our tipping and VAS business. With our improving product offerings and refined algorithms, we can continue to grow our DAU base and improve our DAU/MAU ratio with reduced sales and marketing spend. Second, we are committed to improving our financials by expanding our growth margin and narrowing our losses.
After a challenging first half of the year, revenues in the Q3 grew to RMB 5.8 billion, up 18% quarter-over-quarter and 11% year-over-year. In the Q3, we continued to take various actions to tighten our spending. Gross margin improved to 18%, up 3 percentage points sequentially. Sales and marketing expenses as a percentage of total revenues were 21%, down 3 percentage points sequentially. Our non-GAAP net loss ratio also narrowed by 10 percentage points compared with the prior quarter. Looking ahead, we will implement a number of additional cost control measures and further rationalize our marketing expenses and headcount planning. Specifically, we are streamlining our investment in R&D and cutting down on projects with lower chance of success and being extra mindful when exploring new opportunities.
At the same time, we are centralizing our resources in areas related to improving commercialization efficiency and user experience. These adjustments will be completed by the end of this year. Accordingly, we expect our sales, marketing and R&D expenses to peak this year and start to decline in 2023, with net loss narrowing further accordingly. With that, I'd like to provide a brief update on our core pillars of content, community and commercialization. Starting with content. Over the years, as the young generations on Bilibili grow up and enter into new stages of life, their interests evolve, driving greater passions as well as expansion of our content categories.
On top of our traditional strong content verticals, we have seen emerging categories such as automobile, home decoration and interior design, and baby and maternity. In the Q3, 3,800,000 monthly active content creators on Bilibili readily accommodated these varied needs, creating near 60,000,000 new videos on monthly basis. 40% and 54% year-over-year respectively. The expanding content library drive the overall traffic growth on our platform. Total video views grow by 64% year-over-year, driven by both PUGV and Story Mode content, which grow by 34% and over 470% year-over-year respectively. Particularly, with improving content distribution capabilities of Story Mode, content creators can build their fan base more easily, sharing their content with other kinds of ad spreads on Bilibili.
The various monetization passes we have cultivated for our content creators continue to offer more creators more opportunities to make money while doing things they love. In the Q3, over 1,200,000 content creators earned income through multiple channels on Bilibili, up 74% year-over-year. Looking at our community, we consistently deepen our user engagement in our community with our featured and diverse content. As I mentioned earlier, the average daily user time spent reached a record high of 96 minutes, up eight minutes from the same period last year. Our monthly injections also increased 41% year-over-year to 14,400,000,000 . Furthermore, the number of official members on our site was up by 37% year-over-year to 183,000,000 , maintaining a stable 12-month retention rate above 80%. Now, let's look at our commercialization and the prospects for near and long-term monetization.
First, our VAS business. Our VAS revenues was RMB 2.2 billion, up 16% year-over-year in the Q3. By further integrating live broadcasting with our PUGV ecosystem, we maintain our unique platform advantage. We have 57% more live broadcasting hosts in the Q3 this year than for the same period last year. The number of live broadcasting paying users increased by 79% year-over-year in the Q3. The number of premium memberships for the Q3 grew 12% year-over-year to 20,400,000 . In December, we plan to launch our self-produced Chinese anime title, The Three-Body Problem. This highly anticipated title is expected to attract a wide range of sci-fi lovers to our platform. Looking at our advertising, despite softness in microenvironment, net revenues was RMB 1.4 billion, an increase of 16% year-over-year.
We further strengthened our integrated marketing campaign offerings by combining diverse ad products and conversion modules across different video viewing scenarios. Story Mode ads, as part of ad offerings, continued to capture more performance-based ad dollars in the Q3. Our top advertising verticals in the Q3 were games, digital products and home appliance, skincare and cosmetics, automotive, and food and beverage. As for games, our game revenues grew 6% year-over-year to RMB 1.5 billion, largely driven by the new titles we launched in the domestic and overseas market in the Q3. Develop in-house, distribute globally remains our core game strategy, which has started to bear fruit. Revenue generated from self-developed games contribute 9% of our total game revenue in the Q3.
Looking at our pipelines, we have two games approved for domestic release this year and early next year, including one self-developed title. Five titles are slated to launch in the overseas market early next year. Facing the market's micro uncertainties, our primary goal is clear: improving our gross profit margin and narrowing our net loss. By expediting our commercialization, we believe our top line can catch up with our community scale. While we remain committed to our goal of reaching non-GAAP operating break even by 2024, we will also actively manage our cash position and liabilities. We believe we can weather through the micro uncertainties and emerge as a stronger, more efficient, and more resilient company. This concludes Mr. Chen's remarks. I will now provide a brief overview of our financial results for the Q3 of 2022 and the outlook for the Q4 of 2022.
Total net revenues for the Q3 were RMB 5.8 billion, up 11% from the same period of 2021. Our total net revenue breakdown by revenue stream was approximately 25% mobile games, 38% VAD, 23% advertising, and 14% from the e-commerce and other business. Cost of revenues increased by 13% year-over-year to RMB 4.7 billion. Our gross profit in the Q3 was RMB 1.1 billion, and our gross margin was 18.2%. Gross margin recovered by 3.2 percent points sequentially attributable to the top-line growth. We expect to show continued sequential quarterly improvements in the first quarter and the coming year. Total operating expenses was RMB 2.9 billion, flattish compared with the same period of 2021.
We cut sales marketing expenses by 25% year-over-year to RMB 1.2 billion. Sales marketing expenses as a percentage of total revenues was also down to 21% compared with the 31% in the same period last year. G&A expenses was RMB 543.4 million, 14% year-over-year. The increase was mainly primary due to increased headcount in G&A personnel and higher rental expenses. R&D expenses was RMB 1.1 billion, representing a 43% increase year-over-year. The increase was primarily due to increased headcount in R&D and increased share-based compensation expenses. Net loss and adjusted net loss was RMB 1.7 billion and RMB 1.8 billion for the Q3 of 2022 respectively.
We successfully narrowed our adjusted net loss ratio by 10 percent points sequentially in Q3. We expect the narrowing trend will continue in the Q4 and the coming years. Turning to our capital allocation and the liability management. We currently have three outstanding convertible bonds totaling $2.5 billion, among which the put right of $746 million is exercisable in June 2023. $429 million is exercisable in April 2024, $1.3 billion is exercisable in December 2024. As of September 13 2022, we had cash and cash equivalents, time deposits, and short-term investments of RMB 23.9 billion or $3.4 billion.
We believe this level of liquidity is sufficient to repay the aggregate balance of all outstanding convertible bonds by their respective maturity without considering any external funding resources available to us. Meanwhile, we are taking further actions to narrow our losses and reaching breakeven. We are be prudent with our CapEx and we'll closely monitor our cash outflow. At the same time, these convertible bonds are currently traded at discounted price, and we will continue to evaluate the option to repurchase and retail them at reasonable price. As of October 31 2022, we had repurchased and retailed a total principal amount of $329 million U.S. dollar of these notes for a total cash consideration of $247 million U.S. dollars, generating $82 million U.S. dollar net cash position. We will stay opportunistic when continuously evaluating options for the best use of our capital.
Our conversion from a secondary to a primary listing on the Hong Kong Stock Exchange became effective on October 3 2022. Bilibili is now a dual primary listed company in Hong Kong and the United States. This conversion will further expand our investor base and provide more liquidity for our securities in the capital markets. With that in mind, we are currently projecting net revenues for the Q4 of 2022 to be between RMB 6.0 billion and RMB 6.2 billion. Thank you for your attention. We would now like to open the call to your questions. Operator, please go ahead.
Thank you. As a reminder, if you would like to ask a question, please press star one one on your telephone and wait for your name to be announced. That's star one one if you would like to ask a question. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. Please limit your questions to one at a time. If you wish to have follow-up questions, please rejoin the queue. Please stand by while we compile the Q&A roster. Thank you. We'll now take our first question. Please stand by. Your first question is from the line of Daniel Chen from JP Morgan. Please go ahead.
I will translate myself. In the previous prepared remark, management mentioned that user growth focus will switch into daily active user, DAU. Could you maybe elaborate more about our future user growth strategy? Thank you.
嗯 ， 我 们 以 用 户 增 长 为 中 心 的 一 个 策 略 是 在 二 零 一 九 年 提 出 的 ， 然 后 那 个 时 候 呢 ， 我 们 的 MAU 是 在 一 点 一 个 亿 。 所 以 的 话 就 是 ， 呃 ， 我 们 在 之 前 是 一 直 以 MAU 为 我 们 用 户 的 一 个 指 标 ， 然 后 过 去 的 三 年 我 们 从 一 点 一 个 亿 增 长 到 了 ， 呃 ， 这 个 Q 的 三 点 三 亿 。
We raised the MAU centered around MAU strategy back in 2019. In the past, we have successfully expanded our MAU from 110,000,000 to nowadays 330,000,000 . This is quite successful, and showed our excellent execution in the past few years.
我 觉 得 过 去 3 年 就 是 3 倍 的 那 个 MAU 的 增 长 ， 它 证 明 了 就 是 我 们 社 区 加 生 态 驱 动 的 这 个 增 长 模 型 是 成 功 的 。 它 也 证 明 了 就 是 B 站 能 够 在 保 持 高 质 量 用 户 的 情 况 下 能 够 高 速 的 增 长 。
We're able to grow 3x in the past few years, which supported the thesis that Bilibili's business model, which is the community plus the content ecosystem, works and is quite successful, and shows our ability to maintain a high quality, highly stickered community while deliver a very impressive user growth.
从 我 们 今 年 的 工 作 情 况 来 看 呢 ， 我 们 觉 得 ， B 站 的 MAU 其 实 还 有 不 少 的 提 升 空 间 ， 而 我 们 Q3 其 实 都 做 到 了 25% 的 同 比 增 长 。 如 果 照 我 们 现 在 的 这 个 增 长 模 型 发 展 下 去 ， 我 认 为 明 年 400 million MAU 的 指 标 是 一 定 能 做 到 的 。
Based on our 2022 work progress, we still see a lot of room for our MAU growth. Even in 3Q, we deliver a 25% year-on-year growth. If we carry on the current strategy, we believe we can still achieve the 400,000,000 MAU target by next year.
嗯 ， 在 我 们 重 视 MAU 增 长 的 同 时 ， 其 实 从 今 年 就 是 二 零 二 二 年 开 始 ， 我 们 也 非 常 重 视 DAU 的 增 长 。 因 为 DAU 相 对 MAU， 它 更 能 够 代 表 用 户 增 长 的 质 量 和 可 持 续 性 ， 并 且 DAU 和 平 台 的 这 个 商 业 变 现 的 一 个 价 值 更 加 的 绑 定 。
Starting from 2022, we also put a lot of work in terms of the DAU growth, because we do believe that DAU compared to MAU can present the quality of the user growth as well as the sustainability of the user growth. In addition, it also directly links to the commercial prospects of our community.
就 在 我 看 来, 做 大 用 户 数 它 是 一 个 目 的, 那 个 做 高 用 户 的 价 值, 它 是 我 们...
做 大 用 户 数 是 一 个 手 段 ， 做 高 用 户 的 一 个 价 值 是 我 们 的 一 个 目 的 。 其 实 最 终 MAU 的 增 长 ， 它 最 终 的 结 果 ， 它 其 实 就 是 DAU 的 一 个 增 长 。 大 家 可 以 看 到 我 们 今 年 是 非 常 重 视 提 高 DAU 的 和 MAU 的 一 个 ratio 的 ， 就 是 它 的 这 个 DAU 比 MAU 的 比 例 ， 从 去 年 的 26% 是 提 到 了 今 年 平 均 都 有 27% 。
Like I said, the growth is not the purpose. It's just a way to achieve our goal of increase the quality of our user. In the end of the day, the growth over MAU will directly link to the growth of DAU. That's why starting from this year, we are putting more emphasize and resources to increase our DAU. If you look at our DAU to MAU ratio, it has already improved from 26% in 2021 to 27% in 2022.
今 年 以 来 大 家 也 都 知 道 ， 就 是 在 宏 观 的 环 境 方 面 应 该 是 出 现 了 非 常 多 的 变 化 和 挑 战 。 我 们 也 已 把 收 窄 亏 损 作 为 工 作 中 非 常 非 常 重 要 的 一 个 指 标 。 在 这 种 状 况 下 ， 我 们 在 用 户 增 长 方 面 ， 我 们 一 定 会 更 重 视 用 户 增 长 的 质 量 。 我 们 把 工 作 转 到 以 DAU 为 主 ， 一 方 面 是 有 利 于 提 高 这 个 变 现 的 效 率 和 收 入 端 的 提 升 ， 另 外 一 方 面 也 能 够 减 少 那 个 sales and market 的 一 个 支 出 ， 让 我 们 更 快 地 去 实 现 盈 亏 平 衡 。
As you may all aware that we are facing multiple challenges from the macro environment and putting profitability at first is one of the most important task for the management. The reason why we're putting more emphasis to DAU instead of MAU, we believe from one aspect, it can help us to increase the monetization efficiency, help us to grow our revenue. At the same time, to reduce our sales marketing expenses and to achieve break-even as soon as possible.
我 们 对 DAU 的 增 长 肯 定 也 是 非 常 有 信 心 的 ， 而 且 的 话 我 们 认 为 这 个 增 长 会 更 持 续 ， 并 且 能 够 更 有 利 于 商 业 化 。 然 后 我 们 在 做 具 体 工 作 的 时 候 ， 我 们 也 会 更 加 地 重 视 那 个 DM ratio 的 一 个 持 续 提 升 。 明 年 的 话 ， 我 们 会 争 取 把 DM ratio 的 这 个 呃 ， 比 例 争 取 提 到 百 分 之 三 十 。
We are very confident to the DAU growth next year, and we believe this will be more sustainable for the whole company as well as be very beneficial to our commercialization efforts. As for the outlooks for next year, we hope to increase our DAU to MAU ratio to 30%.
随 着 这 个 工 作 重 心 的 一 个 转 移, 我 们 在 市 场 费 用 方 面 我 们 控 制 得 也 会 更 好. 其 实 我 们 在 2002 开 始 已 经 开 始 控 制 市 场 费 用 了, 大 家 可 以 看 到 Q3 的 市 场 费 用 同 比 下 降 是 25%. 随 着 我 们 的 这 个 工 作 中 心 的 变 化, 在 明 年 也 就 是 2023, 整 体 的 市 场 费 用 会 比 2022 有 着 更 大 程 度 的 一 个 下 降.
Starting from 2022, we have already taken actions to control our sales and marketing expense. In Q3 this year, our sales and marketing expense already declined 25% year-over-year. As we're shifting our focus from MAU to DAU, we expect we can further reduce our sales and marketing expense, and the magnitude of the decline will be even bigger in 2023 compared to 2022. Operator, next question, please. Thank you.
Thank you. We'll now take our next question. Please stand by. This is from the line of Lei Zhang from Bank of America. Please go ahead.
Hi, 管理层 晚上好, 谢谢 接受 我的 提问. 我的 问题 主要 是 关于 成本 费用的, 有 看到 我们 三季度 其实 亏损 有 比较 明显的 收窄, 可以 分享 一下 driver, 还有 未来 有 哪些 成本 和 费用的 项目 可以 有 更大的 空间 改善? 还有 我们 如何 看 长期的 毛利率 和 利润率 的 趋势? 然后 可以 请 管理层 remind 一下 我们 现在的 这个 盈亏平衡 的 一个 目标 是不是 有 发生 变化? 谢谢. 我 自己 翻译 一下. Thanks management for taking my question.
My question is mainly on the profitability. Notice that, our operating loss narrowed in Q3. How should we look at our gross margin and OP margin trend? Which cost item we see further room to control? Also, any change to our break-even target? Thank you.
嗯 ， 去 年 底 我 们 提 出 了 在 2024 年 盈 亏 平 衡 的 这 么 一 个 目 标 ， 呃 ， 这 个 目 标 是 不 会 有 变 化 的 。 然 后 而 且 的 话 ， 就 是 在 今 年 啊 ， 多 重 宏 观 环 境 的 挑 战 之 下 的 话 ， 其 实 减 亏 已 经 成 为 了 公 司 最 重 要 的 工 作 之 一 ， 这 是 我 亲 自 在 盯 的 工 作 。
We raised the target of reach break-even by end of 2024 and we'll stick to that, mission and goal. As we move through 2022, obviously there's been multiple challenges across the macro environment to reduce loss and putting profitability at first is the priority for the company. This is something I personally look after and taking charge.
嗯 ， 在 降 低 成 本 方 面 呢 ， 就 是 我 们 现 在 已 经 在 做 并 且 见 到 那 个 效 果 的 是 有 ， 比 如 说 我 们 在 IT 成 本 方 面 的 降 低 ， 我 们 单 位 带 宽 的 成 本 啊 是 在 持 续 降 低 的 ， 而 且 我 们 的 市 场 费 用 的 降 低 ， 大 家 在 这 个 季 度 也 能 够 看 得 出 来 。
We have already take actions to reduce our cost and expense. So far, the unit cost for our server bandwidth continue to decline. As I mentioned earlier, sales and marketing continued to decline year-on-year for three consecutive quarters.
接 下 来 我 会 关 注 的 就 是 我 们 市 场 费 用 的 更 大 程 度 的 一 个 降 低, 然 后 这 是 一 个 未 来 持 续 的 一 个 过 程, 包 括 我 们 公 司 内 部 的 管 理 和 研 发 费 用 的 降 低.
Move forward, we'll take more efforts to reduce our sales and marketing expense as well as G&A and R&D expenses.
在 管理 效率 方面 ， 我 会 侧重于 减少 我们 非 核心 业务 的 投入 ， 把 我们 的 资源 都 集中 在 核心 业务 ， 尤其 是 能够 提高 商业化 效率 的 工作 上 。
In terms of the efficiency improvement, I intend to reduce investment on the non-core business and allocating and centralize our resources in areas that such as improving our commercialization efficiencies.
同 时 我 们 会 优 化 组 织 结 构 ， 去 肥 增 瘦 。 这 部 分 的 调 整 在 今 年 内 会 完 成 ， 效 果 会 在 明 年 的 第 一 季 度 大 家 就 能 看 到 。
At the same time, we'll also take actions to optimize our organizational structure to reduce the fat and increase the lean. We expect this adjustment will be completed by end of this year, and will start it to show on P&L starting from Q1 next year.
I will take the question regard to the gross margin and expense trend. As the company take on more actions to reduce cost and prioritize profitability, we expect our gross margin will gradually increase going forward. Sales marketing expense in 2022 has already declined year-over-year, as mentioned by our Chairman, and will continue to decline next year. We expect R&D expenses, which will peak in Q4 this year and start to decline next year. In 2023 and the future period, we expect overall operating expenses in absolute dollar terms will decline year-over-year, and net loss will further narrow down until reach our breakeven target. At the same time, we will pay very close attention to our cash flow and tightly control CapEx and investment as we narrow our losses. We aim to keep our cash balance at a healthy level.
Thank you. Operator, we can take the next question.
Thank you. Please stand by. Next question is from the line of, Xueqing Zhang from CICC. Please go ahead.
管 理 层 晚 上 好 ， 谢 谢 接 受 我 提 问 。 这 边 想 请 教 一 下 关 于 广 告 的 问 题 ， 刚 刚 有 提 到 就 COVID-19 以 及 宏 观 偏 弱 的 一 个 大 环 境 ， 想 了 解 一 下 B 站 广 告 业 务 如 何 去 应 对 ， 然 后 我 们 怎 么 展 望 Q4 和 明 年 的 增 速 。 此 外 ， 也 在 Double 11 期 间 注 意 到 公 司 有 带 货 相 关 的 一 些 广 告 产 品 ， 能 不 能 请 管 理 层 就 展 开 分 享 一 下 。 最 后 也 想 问 一 下 ， 就 是 在 当 前 时 间 点 ， 我 们 是 否 会 考 虑 推 出 前 贴 片 广 告 。 谢 谢 。 My question regards to advertising.
Considering the impact of COVID-19 and the weak macro environment, what's your strategy for advertising business? How should we think about revenue growth in the first quarter and the next year? During the Double 11, we noticed that Bilibili has advertising products related to content e-commerce. Could management share more details about it? Is Bilibili considering launching pre-roll ads at present? Thank you.
今 年 在 这 个 环 境 还 是 比 较 复 杂 ， 也 充 满 挑 战 的 ， 包 括 这 个 经 济 的 宏 观 环 境 、 疫 情 等 等 ， 大 家 都 清 楚 。 三 季 度 的 话 ， B 站 的 广 告 收 入 达 到 了 CNY 13.5亿 ， 同 比 增 长 依 旧 有 16% 吧 。 就 是 还 是 在 整 个 大 环 境 下 保 持 一 个 比 较 好 的 增 速 。 效 果 形 态 的 广 告 的 涨 幅 也 超 过 了 50% 。 同 时 我 们 也 看 到 了 ， 在 广 告 收 入 上 的 市 场 占 有 率 还 是 有 持 续 的 提 升 的 。
Despite weakened macro environment, the ad revenue in Q3 reached RMB 1.35 billion and increased 16% year-over-year. We consider this is a job well done, and especially the ad revenue from performance-related formats increased by over 20% year-over-year, and we are continued to take market share in the ad market.
在 2023 年 ， 我 们 还 是 会 持 续 提 升 整 合 营 销 的 能 力 。 还 有 一 点 也 会 加 强 在 B 站 社 区 里 面 的 正 向 的 商 业 氛 围 ， 更 帮 更 多 的 广 告 主 可 以 在 不 同 的 屏 幕 ， 也 不 同 的 场 景 ， 在 不 同 的 时 间 点 ， 能 同 时 触 达 B 站 的 年 轻 用 户 。 这 更 方 便 品 牌 用 户 去 建 立 他 们 的 心 智 资 产 ， 这 个 是 我 们 会 持 续 在 2023 年 加 强 的 。
In 2023, we plan to continue to enhance our integrated marketing capability and to build a friendly and welcoming environment for advertisers. We will continue to help advertisers to effectively reach our young generation through Bilibili's multiple products and multiple using scenarios and help them to build their brand equity.
但 同 时 的 话 ， 我 们 也 会 把 广 告 业 务 像 上 Q 我 们 提 到 的 一 样 ， 会 进 一 步 地 结 合 内 容 生 态 的 优 势 品 类 去 发 展 ， 包 括 提 升 它 的 广 告 库 存 的 供 给 ， 也 同 时 会 加 快 推 动 消 费 和 交 易 的 在 社 区 里 的 势 能 。
We intend to further combine our content ecosystem with our ad business, particularly in those in our leading verticals, increase our ad inventory, and accelerate ad momentum in the consumption and transaction scenarios.
例 如 像 游 戏 啊 ，3C 数 码 已 经 B 站 已 经 占 市 场 占 有 率 应 该 是 前 五 了 。 那 再 例 如 ， 例 如 像 快 消 品 类 ， 像 食 品 、 饮 料 啊 ， 美 容 美 妆 ， 是 属 于 年 轻 人 生 活 很 必 须 使 用 的 商 品 。 其 实 在 B 站 的 广 告 收 入 上 也 持 续 做 到 了 增 长 。还 有 未 来 有 一 些 比 较 趋 势 大 的 品 类 ， 我 们 看 到 像 汽 车 ， 像 母 婴 ， 像 家 装 家 电 ， 都 是 随 着 年 轻 人 呃 ， 在 B 站 社 区 的 成 长 看 到 巨 大 的 潜 力 。 那 汽 车 在 Q3 同 比 增 速 也 超 过 了 百 分 之 八 十 。
For example, we are already among the top five market player in verticals like game and 3C in digital products. Another example would be for FMCG apps, which are 部 分 young generation necessity continue to grow, such as food and beverage, skin care and cosmetics. As we move forward, we expect verticals like automotive, baby and maternities and home decor and appliances will have great potentials, especially as the young generation continue to grow with Bilibili as they enter different life stages. In Q3, actually automotive sector grow over 80% year-on-year within Bilibili.
刚 才 就 是 您 提 到 了 带 货 ， 也 是 所 谓 在 行 业 内 大 家 会 喜 欢 提 到 带 货 这 个 词 。 在 B 站 社 区 生 态 里 面 ， 我 更 乐 意 会 把 它 定 位 跟 理 解 为 消 费 跟 交 易 的 一 种 表 现 形 式 。 消 费 跟 交 易 是 B 站 社 区 一 个 比 较 基 础 的 建 设 了 ， 也 才 就 在 基 础 建 设 以 下 ， 它 才 是 一 个 B 站 最 重 要 的 一 个 商 业 化 的 消 费 场 景 。 2023 年 ， 我 们 会 进 一 步 地 会 把 交 易 接 入 社 区 ， 也 会 把 交 易 进 一 步 地 接 入 广 告 体 系 。
You mentioned about the content e-commerce, I would rather define the content e-commerce in Bilibili ecosystem as a consumption and transaction scenario. First of all, it's an infrastructure for us, and it is also one of the very important scenarios for commercialization. In 2023, we plan to further connect the transaction scenario with Bilibili community and with advertising business.
就 例 如 在 ， 最 近 两 个 Q， 我 们 都 已 经 跟 Taobao、 Tmall、 Jingdong、 Pinduoduo 以 及 品 牌 广 告 主 一 起 ， 也 尝 试 进 行 了 在 B 站 进 行 种 草 消 费 ， 同 时 交 易 转 化 的 探 索 。 就 是 看 到 了 视 频 ， 包 括 直 播 有 带 货 的 内 容 ， 但 是 加 入 B 站 的 有 特 色 的 广 告 投 流 的 组 合 。 我 们 在 这 种 形 式 上 ， 其 实 在 这 种 类 似 的 案 例 上 ， 我 们 可 以 不 断 地 挖 掘 B 站 在 消 费 交 易 不 同 场 景 的 商 业 价 值 。
For example, in the past two quarters, together with Taobao, Tmall, Jingdong, Pinduoduo and other brand advertisers, we are already starting to explore the seeding, consumption and transaction model, including video and live broadcasting based e-commerce, as well as traffic acquisition within the Bilibili community. With that, we hope to explore the different commercial values of Bilibili unique consumption and transaction scenario.
在 双 十 一 当 天 ， 在 逆 势 上 ， B 站 的 广 告 收 入 还 是 同 比 增 长 了 百 分 之 四 十 七 ， 效 果 形 态 广 告 的 收 入 同 比 增 长 也 超 过 了 百 分 之 八 十 。 呃 ， 在 未 来 ， B 站 的 整 个 消 费 跟 交 易 的 形 态 还 是 会 做 足 够 的 大 开 怀 ， 也 欢 迎 更 多 的 呃 ， 品 牌 ， 还 有 就 电 商 ， 呃 会 跟 所 有 的 电 商 平 台 跟 品 牌 主 一 起 去 把 社 区 的 势 能 ， 还 有 消 费 者 的 势 能 尽 可 能 地 放 大 。
During this year's Double 11, despite the weakened macro environment, we still recorded a 47% year-on-year growth for our advertising revenue, among which the performance-based formats of advertising revenue grow over 80%. In the future, we're looking to further expand and be very open about the transaction and consumption scenario. We welcome more of the brand advertiser to join us to further explore the commercial value within our unique ecosystem.
刚 才 你 也 提 到 另 外 一 个 是 叫 贴 片 广 告 ， 其 实 贴 片 广 告 已 经 是 很 传 统 的 广 告 形 态 了 ， 市 场 在 贴 片 的 收 入 仅 占 3%-5% ， 占 比 其 实 萎 缩 也 很 快 ， 单 价 也 越 来 越 低 。 市 场 对 于 贴 片 广 告 的 判 断 ， 在 Bilibili 能 落 地 是 过 于 乐 观 的 。 Bilibili 的 内 容 大 多 还 是 集 中 在 2-5 minutes 。 所 有 的 内 容 如 果 都 采 取 贴 片 这 种 形 式 ， 收 入 其 实 还 是 会 比 较 少 ， 但 是 又 会 极 其 破 坏 用 户 体 验 。 得 不 偿 失 的 一 种 传 统 的 广 告 形 态 跟 模 式 ， 基 于 Bilibili 是 不 会 轻 易 去 尝 试 的 。
As for the pre-roll, which is an old-fashioned format of advertising, actually only takes about 3%-5% of the overall advertising market in China. It's declining rapidly along with its unit price. We believe some people might have been overly optimistic about the pre-roll potential within Bilibili. Most of the Bilibili content are about two to five minutes long. If we add pre-roll to all of them, it will only generate very limited income, but be extremely disruptive to user experience. We believe it will bring more harm than the good, which we will be very cautious to try out.
这 里 可 以 举 一 些 例 子 ， 就 例 如 如 果 是 在 B 站 上 能 实 现 原 生 广 告 、 弹 幕 广 告 等 视 频 播 放 器 内 的 一 些 创 新 广 告 形 态 是 很 好 的 尝 试 。 或 者 又 例 如 就 是 我 们 可 以 利 用 转 化 组 件 ， 包 括 CPS 组 合 的 方 式 去 实 现 游 戏 的 新 的 投 放 模 型 ， 像 我 们 可 能 内 部 叫 游戏合伙人 。 对 ， 又 或 者 就 第三种 ， 又 或 者 我 们 举 个 例 子 是 新增的 Story Mode ， 它 也 是 一 个 很 好 的 广 告 形 态 的 展 现 的 载 体 。 后 续 Story Mode 的 增 量 都 会 成 为 广 告 收 入 提 升 的 增 长 点 。 之 后 其 实 我 也 会 发 现 ， 包 括 B 站 看 到 的 视 频 商 单 ， 包 括 直 播 商 单 加 起 飞 的 模 型 ， 其 实 它 依 靠 的 是 视 频 的 推 广 模 型 ， 加 上 我 们 的 算 法 模 型 的 迭 代 能 力 可 以 加 强 的 话 ， 这 也 会 对 我 们 广 告 收 入 有 比 较 大 的 增 长 。 我 以 上 只 是 举 了 一 些 我 们 已 经 进 行 或 者 会 积 极 尝 试 的 一 些 例 子 ， 都 会 比 贴 片 更 能 获 得 广 告 收 入 ， 而 且 这 个 增 长 会 持 续 ， 而 且 很 健 康 。
I'll give you some examples of how are we exploring the ad format that's more adaptive to Bilibili's ecosystem. For example, we can explore within the video player frame, such as native ads, full-screen ads, and other innovative formats within the player frame. We can explore the model that combines performance-based ads with both app download conversion module and CPS, we call it a game partner model. Another example would be the Story Mode ads, which we believe is a very good format to carry on the performance-based ads. As the Story Mode traffic continue to grow, it will open us more, it will open more ad inventory to us. Lastly, would be the content e-commerce plus user acquisition within the Bilibili model. We'll continue to refine and optimize our algo to improve those performance-based ad efficiency. All of above mentioned formats of advertising, we believe will generate higher income as well as it's more sustainable to our overall community.
呃 我 们 还 是 十 分 有 信 心 ， 在 2023 年 广 告 业 务 整 体 表 现 还 能 持 续 优 于 整 个 行 业 大 盘 ， 做 到 健 康 增 长 ， 也 会 进 一 步 地 提 高 市 场 的 占 有 率 。 谢 谢 。
We're still very confident that our ad business in 2023 will continue to outperform the overall industry and will continue to take on more market share. Thank you.
Operator, next question, please.
Thank you. We'll now take our next question. Please stand by. This is from the line of Lincoln Kong from Goldman Sachs. Please go ahead.
好，谢谢管理层。我想问一下这个游戏业务这边，我们也看到就是陈总你现在就是自己接手了游戏这个业务，往这个之后看，我们游戏业务这边的这个战略和目标，你这边会有什么样的变化？我们最近这个游戏的版号也是重启发放，未来公司对整体的这个游戏业务的一个增长的预期，尤其是我们的自研游戏，以及海外游戏的拓展，可不可以跟我们分享一下最新的战略和进展？My question is about the gaming business. Given that Mr. Cheng Wei, you have personally taking control of the game business, what's our sort of strategy and targets and any change post your takeover? After the resumption of the, you'll see, the game 版号, how is the company are looking for our overall gaming business growth outlook, especially of our self developed games as well as the overseas gaming strategy and progress. Thank you.
我 记 得 我 在 2019 我 就 提 出 ， 就 是 视 频 和 游 戏 是 B 站 的 主 业 ， 就 所 谓 主 业 ， 那 就 是 一 家 公 司 里 面 最 核 心 的 业 务 。 我 们 比 较 早 就 在 做 游 戏 这 个 业 务 ， 其 实 B 站 做 游 戏 这 个 业 务 它 是 个 自 然 而 然 的 结 果 ， 因 为 B 站 是 中 国 游 戏 用 户 聚 集 度 最 高 的 平 台 ， 同 时 的 话 就 是 我 们 的 直 播 和 视 频 的 内 容 里 面 有 很 多 是 与 游 戏 相 关 的 内 容 。 而 且 的 话 我 们 在 做 的 这 个 原 创 动 画 和 原 创 漫 画 的 IP 跟 游 戏 也 有 很 强 的 协 同 。 游 戏 成 为 B 站 的 核 心 业 务 ， 它 是 个 自 然 而 然 的 结 果.
I raised the strategy of putting video and game as Bilibili's core business back in 2019. As a matter of fact, Bilibili is starting to explore game business from very early days. Actually, Bilibili is the platform that has the most condensed and concentrated gamer in China. At the same time, we have lots of content offerings in terms of live broadcasting and video on our platform. At the same time, the areas that we invested in, the original animation and comics, has great synergies with our game business. Naturally, it's just a natural extension and natural course for Bilibili to put game at our core. In the past two years, the game business just didn't perform as well as we planned, which I believe is mainly due to the slower than expected self-developed game progress.
The reason is that we were exploring in multiple directions by multiple teams at once, but end up spreading too thin and only just to dabble on many, but didn't bear fruit. As I personally take on the game business, it doesn't mean we are making any change to our original strategy. As a matter of fact, we will carry on more diligently to that strategy, which is develop high quality game in-house and distribute globally and putting game business at our core. I intend to focus on only one or two directions, focusing our best resource and our energy on doing the least but the best towards the highest industry standard.
At the same time, I will strengthen the lifecycle management of our self-development products to increase investment in projects that meet expectations and quickly iterate out projects that do not meet the expectations. Moving forward, my requirement for the game business will be to be very, very down to earth and do our best to produce the best product and try our best to increase the to enhance the business. Because we have the perfect environment in game content, I'm still very confident whether it's self-developed games or licensing games, we can deliver sustainable growth in this sector.
Operator, next question, please. Thank you.
Thank you. We'll now take our next question. Please stand by. This is from the line of Yuan Zhang from China Renaissance. Please go ahead.
My question regarding live broadcasting. The integration between the live broadcasting and the video streaming has been on for a while. Can you share more color on the strategy and discuss our expectation about live streaming business? Thank you.
嗯 ， 我 们 直 播 业 务 的 表 现 还 是 符 合 我 们 的 预 期 的 。 呃 ， 在 前 三 个 季 度 ， 我 们 直 播 业 务 的 同 比 增 长 是 百 分 之 三 十 。 而 且 的 话 ， 不 仅 是 我 们 的 营 收 在 增 长 ， 啊 ， 我 们 的 毛 利 率 也 在 稳 步 提 升 。
We think the live broadcasting business has meet our expectations this year. The first three quarters this year, our live broadcasting revenue grow by 30% year-on-year. Our live broadcasting gross margin also starting to recover, this year.
我 过 去 一 直 说 ， 直 播 是 B 站 平 台 的 一 种 能 力 ， 它 是 B 站 内 容 生 态 的 一 个 自 然 延 伸 。 其 实 ， 这 句 话 也 代 表 了 就 是 我 们 做 直 播 的 一 个 思 维 ， 那 就 是 ， 最 大 可 能 地 结 合 B 站 的 内 容 生 态 ， 实 现 视 频 和 直 播 的 正 循 环 。
As I mentioned, in the past, we have always believed live broadcasting is a capability for the platform. It's a natural extension of the video format of content, our strategy has always been combine the live broadcasting ecosystem with our video ecosystem to generate best synergies among these two.
对, 我 们 在 具 体 工 作 中, 我 们 会 挖 掘 供 给 侧 的 一 个 重 叠, 那 就 是 让 up主 成 为 主 播, 让 主 播 成 为 up主. 然 后 我 们 在 Q3 看 到 的 这 个 数 据 是, 就 是 既 做 up主 又 做 主 播 的, 这 样 的 人, 他 的 同 比 增 长 是 73%, 这 个 是 一 个 非 常 高 速 的 一 个 增 长, 它 代 表 的 其 实 也 是 我 们 在 供 给 侧 的 一 个 能 力 的 提 升.
From the supply of content side, we have continuously explore within our ecosystem to convert our content creators to host and convert our host to content creators. In Q3, content creator slash host, the number of those content creator slash host has increased 73% year-over-year, which is a quite impressive growth. This demonstrate how our strategy is working, and we are increasing the supply side of the content.
对 ， 同 时 的 话 ， 就 是 我 们 也 重 视 挖 掘 消 费 侧 的 一 个 重 叠 。 就 是 我 们 可 以 看 到 ， 就 是 我 们 有 越 来 越 多 的 ， 越 多 的 用 户 ， 既 看 这 个 品 类 的 视 频 ， 啊 ， 也 看 这 个 品 类 的 直 播 ， 然 后 这 个 不 仅 提 高 了 我 们 直 播 的 DAU 渗 透 率 ， 同 时 也 提 高 了 我 们 的 付 费 率 。 我 们 可 以 看 到 ， 就 是 我 们 直 播 的 MPU 同 比 增 长 是 百 分 之 七 十 九 ， 这 个 也 是 来 自 于 我 们 对 于 消 费 侧 的 一 个 挖 掘 。
We are also exploring from the demand side, to discover the users that, they might be both interested in the same vertical of content, whether it's in the format of video or it's in the format of live broadcasting. In the Q3, we've seen the DAU penetration of the live broadcasting continue to increase. The MPU for live broadcasting also recorded a 79% year-on-year growth. This is also very impressive growth.
在 上 个 季 度 呢, 我 们 是 在, 公 司 的 这 个 组 织 结 构 上, 把 视 频 的 运 营 和 直 播 的 运 营, 就 是 整 合 成 了 同 一 个 部 门. 这 个 部 门 呢, 它 继 续 做 up主 的 运 营, 也 去 做 主 播 的 运 营. 它 既 关 注 看 视 频 的 用 户, 也 关 注 在 直 播 里 面 消 费 的 用 户. 我 觉 得 这 个 组 织 结 构 确 确 实 实 更 大 程 度 地 提 升 了 我 们 视 频 跟 直 播 的 这 个 正 循 环.
Last quarter, we have combined the operation of live broadcasting with the PUGV. From the organizational perspective, it's the same team that's looking over the content creators operation as well as the live broadcasting host operation. It's also the same team that's paying attention to user, which user is watching certain content category and what kind of live broadcasting content he or she might be interested in. We believe this change are really lining up and align our goals of, our operation target, at the same time be to increase our overall organizational efficiency.
就 是 这 个 组 织 结 构 的 整 合 还 带 来 了 一 个 好 处， 那 就 是 对 于 相 同 的 内 容 品 类， 视 频 的 运 营 跟 直 播 的 运 营 整 合 成 一 个 团 队 之 后， 然 后 你 会 发 现 就 是 他 们 能 够 发 现 很 多 新 的 运 营 方 式， 比 如 说 像 我 们 的 VTubers 的 这 个， 这 个 品 类， 然 后 它 通 过 把 虚 拟 开 播 跟 视 频 的 素 材 库 更 好 地 整 合 起 来， 它 是 能 够 更 大 地 提 升 我 们 VTubers 的 开 播 率 的.
We're combining of the operation of for the same vertical in terms of live broadcasting and PUGV. For example, in terms of the UP content categories, now we are opening up the video materials or video inventory to both VTUBER's as well as the virtual content creators. This has significantly increased the live broadcasting host frequency of opening up their live broadcasting program and increased our overall content supply. Another example would be the knowledge sector. In the past, we might think that for the knowledge sector content creator, it's difficult for them to monetize through live broadcasting. However, we've discussed in the law area or in the relationship areas, it's very suitable for the live broadcasting host to connect directly with the participants and do a Q&A session.
Actually, we have seen one live broadcasting host to gain her 1,000,0000 follower milestone just through the live broadcasting services. This will be another example after the integration of the two operations, we can explore new opportunities. As such, I'm very confident, as the integration further penetrate within the live broadcast and PUGV. The live broadcasting revenue as well as its gross margin will continue to increase in 2023. Back to you, operator. I think that's about time for the Q&A session today.
Thank you. That does conclude the question and answer session. I would like to turn the conference back over to Juliet Yang for any additional or closing remarks.
Thank you once again for joining us today. If you have further questions, please contact me, Juliet Yang, Bilibili Executive IR Director or Bilibili Investor Relations. Our contact information for IR in both China and the U.S. can be found on today's press release. Have a great day. Bye-bye.
Thank you. This does conclude the conference for today. Thank you for participating. You may now disconnect.