Photo/Wu Fan

Sept. 29 (NBD) -- Chinese video sharing website Bilibili Inc (NASDAQ: BILI) is set to purchase a 10.59 percent stake in Zenith Group Holdings Co., Limited (Zenith) from a Hong Kong subsidiary of animation firm Alpha Group for 47.33 million yuan (6.9 million U.S. dollars), in an attempt to diversify its sources of income.

Upon the completion of the deal, Bilibili will hold a 30 percent stake in Zenith. 

Shanghai HENIAN Information Technology Co. Ltd., which is fully owned by Zenith, has created six Chinese vocaloid characters including Luo Tianyi, Yuezheng Ling and YANHE.

Among all the vocaloid characters in China, Luo Tianyi is the most mature one and the only one that realizes profits, according to some industry insiders. There are more than 10,000 songs sung by Luo Tianyi on Bilibili website. In addition, Luo Tianyi is the first virtual music vocal appearing on China's mainstream TV channel.

By raising stakes in music software developer Zenith, Bilibili expects to make gains from virtual music vocals by providing live streaming, games, offline events and derivatives. 

Bilibili told NBD that with the rapidly expanding market and growing popularity, Luo Tianyi endorses not only products in ACG sector, but also lifestyle brands such as Pechoinm, KFC, Mirinda, SPD Bank and Pizza Hut.

Chen Rui, chairman and CEO of Bilibili, is bullish on virtual idols, saying that a boom of the virtual idol culture is coming and the new collaboration with Zenith is expected to propel the development of both the culture and Bilibili's community ecology.

Known as China's leading video website themed around animations, comics, and games (ACG), Bilibili engages in mobile games, live broadcasting and value-added service, as well as advertising. But the company now depends heavily on earnings from its game business. 

Data shows that the game business contributed 83.4 percent to Bilibili's total revenue in 2017, rising sharply from 65.4 percent in 2016. The figure slightly fell to 79 percent and 77 percent in the first and second quarters of this year, respectively.

Emphasizing diversified development, the company would lower the metric to around 50 percent in the next three to five years, Bilibili CFO Fan Xin once said. 

It is noted that Bilibili has invested in 36 enterprises in the upstream and downstream of the ACG industrial chain as of early 2018, in a bid to improve the industrial chain landscape. 

Email: zhanglingxiao@nbd.com.cn