Risk Management for Bilibili(2019) – Exploring a Risk Management Plan

All reference resources used are before 2019, the ‘current’ mentioned below refers to the beginning of 2019, and the ‘future ‘refers to the second half of 2019 and beyond.

As I mentioned in the previous post, we can see that the company has always placed content in a critical position. On the other hand, there were many incidents in the online entertainment industry that suffered from penalties because of content quality issues in China. Hence, the quality of the content is one of the clearest and urgent risks that could be encountered for Bilibili. In the following content, I attempt to use BowTie XP to explore current and improved risk management plans to reduce this risk respectively. And only some typical threats and consequences in each figure are introduced detailly.

Existing Risk Management Plan

the BowTie map of the existing risk management plan

The above BowTie figure indicates the causes and results of the content quality problem, according to the data, news, laws, government policies, company terms and so forth I have collected. Consequently, the hazard could be defined as ‘Operating the content in the platform’. And the top event is ‘illegal or inappropriate content posted’.


one of the threats

One of the most obvious threats I set introduces that ‘content providers ignore or comply with the requirement intentionally’. In one of the cases that would lead to this situation, some content creators would like to have more traffic by posting illegal content. In order to handle the problems, Bilibili set up the membership exam from 2013, which means only the users pass this exam, then they can upload content. And another barrier indicates that only certified content providers can upload the specific type of content, such as political information.


one of consequences

One consequence is if users saw inappropriate content, they may reduce their engagement and loyalty. For example, a well-known former poster of Bilibili was exposed in the video content and comments he posted in 2018 that there were several sexual harassments and homophobic inappropriate information. This incident caused many users to doubt the website’s review and management mechanism at the same time as they resisted this poster. As a result, the platform was punished by relevant departments and its reputation was damaged. There are three barriers I found for this situation. Firstly, deleting this content as soon as possible. Secondly, Bilibili provides the report system. And the last measure is content providers who have posted illegal or inappropriate content would be sent to Xiaoheiwu temporarily or permanently to limit them to use the website.

Improved Risk Management Plan

the BowTie map of the improved risk management plan

The new risk management plan above has been improved based on the existing plan and multiple potential factors. So the hazard and event kept unchanged. Some new threats, consequences and the barriers could be found in the map, highlighted by red rectangles, that are introduced as follows respectively.


Threats of the improved plan – 1

Laws and regulations changing could be a threat. But for most normal companies, they don’t have enough money to form their own legal departments. Considering the growing number of users of Bilibili.com and the huge potential of its marketplace as mentioned in the previous post, the company should consider the formation of an internal legal department in the future to handle the risks by business growth.

Threats of the improved plan – 2

And some techniques could help to improve the efficiency of content review, such as artificial intelligence. 


Consequences of the improved plan – Part 1

For the consequences, in order to avoid losing money, the company could buy some business assurances, while the commercial assurance system is not perfect enough in China.

Consequences of the improved plan – Part 2

The worst consequence I can think of is Bilibili has to shut down the platform permanently. But I have no idea about how to make a barrier for it.

Risk Management for Bilibili(2019) – Identifying Risks

All reference resources used are before 2019, the ‘current’ mentioned below refers to the beginning of 2019, and the ‘future ‘refers to the second half of 2019 and beyond.


Based on the collected information, the four major risks of Bilibili are classified and shown as the mind map above. The arrows among them represent the relationship of influencing among each risk. The major risks have been identified and discussed as follows.

  1. Distribution of income. The company prospectus(2018) shows the percentage of profit from mobile games increased by year, which are 65.7%, 65.4% and 83.4%  of the total net revenue from 2015 to 2017 respectively. During this period, Bilibili did not invest much budget in the mobile games market, thereby the number and size of mobile games Bilibili owns were not large. In addition, all of those mobile games Bilibili owns were offered from third-party game developers and publishers. However, there were significant returns brought by mobile game products and services. Especially in 2017, two of the games have a particularly strong income, which accounted for 71.8% and 12.7% of the total revenue from mobile games. While revenue from mobile games fell back to 61.7% (103.7 million US dollar) of the total net revenue (168.1 million US dollar), it increased by 15% compared to the same period of 2017 (90.2 million US dollar) (according to the data from Bilibili Investor Home). 
  2. Technology competence. A recent study(Kang et al., 2015) shows that it is widely believed that the Internet is a simple service system due to the degree of cash technology education. This allows users to carry more privacy protection options in the absence of understanding. Hence, any mistakes in platform network security can have a significant adverse impact on our business, operations and reputation, given the extreme trust of such users. Technologies could support operations and review content, reducing risk due to operational errors or content non-compliance.
  3. Monitoring by the regulators. There were two events of penalties by the Chinese government in the history of Bilibili, which happened in 2012 and 2018 respectively (Hangzhou Municipal Bureau of Culture, Radio, TV, Film, Press and Publication Bureau, 2012 and The China Media Project, 2018). The reasons for them were both because of the violation of the regulations. Therefore, if the videos, games and other content formats in the Platform are deemed to be in violation of any laws or regulations of the People’s Republic of China, the business, financial condition and results of operations of Bilibili may be materially and adversely affected.
  4. Quality of content provided in the platform. the prospectus of Bilibili (2018) points out that the PUG content attracts more users to the platform. In 2017, PUG video views accounted for 85.5% of its total video views, compared with 74.5% in 2016. However, the quality and quantity of the PUG content cannot be controlled effectively because the content is produced by users. The quality of the content will affect the number of users. Once the number of users declines, the company’s revenue will be affected. Moreover, the quality of the content also affects the regulatory results of government regulators, community culture and brand reputation. These aspects will directly affect the company’s revenue and development.





Risk Matrix

There are reasons for the positioning of each risk as follows. 

  1. Distribution of income. As mentioned above, the revenue from mobile games accounted for a significant proportion of the total net revenue from 2015 to 2018. However, Bilibili has built a partnership with a number of famous game developers since 2018, such as GREE and Tencent.
  2. Technology competence. The population of active users of Bilibili has been over 77.5 million per month since 2018 (according to Simple investor). If the service is unavailable or security issues due to technical reasons, the company’s revenue and reputation will suffer huge losses. However, Bilibili mentions that there is almost no such problems have occurred since the operation of the platform.
  3. Monitoring by the regulators. Two serious penalties occurred in the company’s history, resulting in property damage and platform rectification.
  4. Quality of content provided in the platform. Bilibili announced that the size of the content acceptance team would be increased. However, even with a large number of manual acceptance, there is no guarantee that the quality of a large amount of content will be fully guaranteed.

Risk Management for Bilibili(2019) – Overview

This is actually a study topic in my master’s period. The relevant course is about business risk management, mainly by learning methods, frameworks of risk management and practise on real business projects or companies. Secondly, Bilibili, as an Internet platform that I have been using all the year-round and one of the ideal employment companies for me in the future, has become my research object in this practice. So I would like to introduce and review the contents of this meaningful practice (All reference resources used are before 2019, the ‘current’ mentioned below refers to the beginning of 2019, and the ‘future ‘refers to the second half of 2019 and beyond).

Bilibili is the first iconic online entertainment brand for young people in the People’s Republic of China. The company has been providing a content community based on animation and professional user-generated (PUG) video since 2009 and went public in the US in 2018. Bilibili points out that their strategies are to improve the content offerings and user experience on the platform and to enhance technologies and other relevant capabilities. According to Bilibili’s only one clear mission which is to enrich the daily life of Chinese young people, their target market is the online entertainment industry and the user positioning aims for Generation Z, which refers to individuals born from 1990 to 2009 in China. iResearch shows that China’s online entertainment industry market arrived at RMB205.8 billion as of the end of 2016 and kept a growing trend. CNNIC presents the result that the number of Internet users who were aged 10-39 in China accounted for 75.0% of the total number of Chinese netizens by December 2017, which reached 579 million. Moreover, the market share contribution to the online entertainment industry of the major part of them who were born between 1990 and 2009 is expected to increase from 45.8% in 2014 to 54.8% in 2017. iQIYI is a leading online entertainment platform, operating the largest TV video streaming service in China. Alexa has revealed the result that the traffic rank of the iQIYI website is 30 in China, which is the closest rank to Bilibili website (17) as the online entertainment platform. Hence, iQIYI is one of the main competitors of Bilibili in the Chinese market.

Bilibili Inc. has been operating its main product which is an online entertainment website ‘Bilibili.com’. It mainly targets young users, with ACG(Anime, Comic, Game) as the main content in the early stage. After more than a decade of development, content themes now cover many areas, including music, movies, science and technologies, lifestyle, games, and more. Bilibili also offers live streaming services in the form of streamers. Typically the topic is anime, daily life, game strategy, etc. It is a remarkable fact that most of the content is created and uploaded by users independently, which guarantees the diversity and creativity of the content. Apart from hosting content, the core feature of Bilibili is a subtitle comment system which displays user comments as streams of moving subtitles on a video playback monitor which are visually similar to a shooter game by ‘Danmu’. That is the name of these subtitles in Chinese. These subtitles are simultaneously transmitted in real-time to all viewers and create an experiential chat room in which users want to watch and play together. This highly interactive viewing experience increases user stickiness greatly. Due to the good market positioning and these novel and attractive features, the number of users has kept growing year by year.

However, because of the continuously growing number of users and market demand, and other uncontrolled factors like the policy terms, challenges and uncertainties keep increasing as well. The company has a detailed discussion of these in the prospectus(2018). The following roadmap shows the structure based on the detailed content of the prospectus, and each node is indexed by the page number for reading easily.

The structure of Bilibili Prospectus(2018)