Bilibili's ad revenue surges as video platforms enter a new monetization cycle

Amid a weak broader market, video platform Bilibili is driving strong growth in its advertising business through AI technologies and an increasingly mature user base, though its more aggressive monetization strategy is now testing its iconic community culture.

Key points:

• Bilibili’s advertising revenue grew by 30% in the first quarter, significantly outpacing overall revenue growth, while gaming and IP-related revenue declined.

• The robust growth in advertising reflects the company’s improved ability to monetize loyal users, adoption of AI-powered ad tools, and rising commercial value of its user base.

By Hu Minghe

Chinese video platforms have never lacked attention from loyal users; the real challenge lies in converting this traffic into sustainable profit growth. With advertisers remaining cautious, content costs staying high, and AI emerging as another significant expense, this challenge is becoming even more pronounced.

This is also whyBilibili Inc.（$BILIBILI-W (09626.HK)$$Bilibili (BILI.US)$) latestquarterly earningsearnings report deserves particular attention. The company only recently crossed the threshold of annual profitability, reporting its first-ever full-year profit in 2025. Now, it must demonstrate that this profitability stems not merely from cost controls but from sustainable growth potential. In the first quarter, revenue rose 7% year-over-year to RMB 7.47 billion (USD 1.08 billion), with advertising revenue surging 30% to RMB 2.59 billion, becoming the primary growth driver. Daily active users increased by 8% to 115.2 million, with average daily time spent reaching 119 minutes.

Other business segments performed relatively poorly. Value-added services—the company’s largest segment—saw revenue increase by just 4% to RMB 2.91 billion. Mobile gaming revenue fell 12% to RMB 1.52 billion, primarily due to a high base effect from a popular game in the same period last year, which has now entered a more mature lifecycle stage. Revenue from intellectual property (IP) derivatives and other sources also declined by 4% to RMB 448 million. In short, advertising was the standout performer this quarter, while other segments clearly lagged.

A more discerning ad market

Bilibili's advertising growth stands out particularly because other large internet companies are still broadly facing pressure from advertisers cutting marketing budgets amid China's economic slowdown.Baidu （$Baidu (BIDU.US)$$BIDU-SW (09888.HK)$) Due to its continued heavy reliance on search ads, online marketing revenue declined by 22% in the first quarter. Online video platformsiQIYI（$iQIYI (IQ.US)$) Online ad revenue also fell by 7% during the same period.

While many platforms are experiencing declining ad revenues, Bilibili has managed to sustain strong growth in this core business, signaling an emerging market divergence. Advertisers remain willing to allocate budgets to platforms with clearer user demographics, stronger community engagement, and more sophisticated conversion tools, while platforms lacking these attributes are gradually being marginalized.

Part of Bilibili’s ad growth stems from users spending increasingly more time on the platform, but its real advantage may lie in the 'quality of attention' these users bring.

Bilibili users frequently watch long-form videos related to gaming, technology, animation, product reviews, educational content, and creator discussions. This makes the platform better suited for ad formats that require in-depth explanations and trust-building, rather than just seeking rapid exposure. Additionally, its user base is gradually aging. Management stated that the platform’s average user age is now around 26.5 years, entering a life stage where both personal purchasing power and influence over household decisions are rising simultaneously.

This places Bilibili in a highly favorable demographic sweet spot: its users are young enough to set trends yet mature enough to afford high-ticket items such as consumer electronics, automobiles, home appliances, AI tools, and home renovations.

AI drives both supply and demand

AI is also a key driver of Bilibili’s growth. In the first quarter, ad spending by AI-related advertisers surged more than 170% year-over-year. AI is also enhancing Bilibili’s ad sales efficiency. The company noted that deeper AI integration has improved ad targeting capabilities, boosting the click-through conversion rate (CTCVR)—a key metric for ad effectiveness—by 25% year-over-year. Bilibili also stated that AI-generated content (AIGC) creative tools are helping advertisers produce assets that better align with the platform’s community style, further increasing click-through rates.

Bilibili is not the only platform with a loyal young user base. Douyin, owned by ByteDance, has an even larger user scale and a content recommendation system that has already accustomed users to ads, live-stream e-commerce, online shopping, and local lifestyle services. Xiaohongshu also holds strong appeal for advertisers, as many users actively seek lifestyle advice, product recommendations, travel inspiration, and shopping information on the platform.

Bilibili’s strength lies elsewhere: users are less likely to see it as a shopping guide or entertainment machine, and more as a video community built around creators, fan culture, gaming, technology, and a shared cultural language. Its 'danmaku' feature—where viewer comments scroll across the screen in real time during playback—enhances the sense of participation in the viewing experience. This is one reason for the platform’s high user stickiness, but it also makes monetization more delicate, requiring a careful balance between community experience and revenue generation.

This sensitivity is not new. In 2016, after Bilibili introduced pre-roll ads to some licensed anime content, it triggered a strong user backlash, prompting Chairman Chen Rui to issue a public apology and pledge that certain licensed anime series (legally authorized Japanese animations) would no longer carry such ads. In April this year, Bilibili tested users’ tolerance once again by launching 'pause ads' in its mobile app. This format is more restrained than pre-roll or mid-roll ads—it only appears when a user manually pauses a video—and creators can opt out of participating. Nevertheless, this move signals the company’s ongoing search for new ad placements to enhance monetization.

Cost pressures persist

Bilibili also needs to continue driving ad revenue growth to maintain profitability, especially as other revenue streams slow down or even begin to contract. At the same time, the company is actively managing costs. Operating expenses rose just 3% in the first quarter, partly due to a 1% decline in sales and marketing spending. R&D expenses increased by 9%, primarily driven by AI investments. Management also indicated that full-year AI-related capital expenditures could rise by approximately RMB 1 billion.

Earlier this year, Chinese media cited online rumorsreportclaiming that Bilibili would carry out large-scale layoffs, including widely circulated reports of a '60% workforce reduction' and impacts on its R&D operations. While the 60% figure is almost certainly a significant exaggeration, the episode remains noteworthy as it reflects broader industry sentiment: internet and entertainment companies must simultaneously invest in AI development, maintain profit margins, and cut underperforming businesses.

This also explains why Bilibili’s current investment narrative appears more compelling than that of traditional video platforms like iQIYI. Bilibili has a clearer ad monetization logic, a younger yet maturing user base with rising purchasing power, and a differentiated profile thanks to its gaming revenue structure. In addition to 7% revenue growth, the company reported a 62% surge in adjusted net profit for the latest quarter, reaching RMB 585 million. By comparison, iQIYI saw a 13% year-over-year revenue decline during the same period and returned to a loss-making position.

Yet Bilibili’s greatest strength is also its biggest constraint. Its ad growth largely hinges on users’ continued belief that the platform is different from its peers. First-quarter results showed that Bilibili can indeed sell more ads, particularly those that align well with the platform’s content culture. However, the harder question remains: how much advertising can the platform accommodate before it starts to feel unlike the 'Bilibili' that many loyal users know and love?

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