(Yicai) Nov. 30 -- Bilibili’s shares tanked after the Chinese YouTube-like video platform cautioned investors that annual revenue will probably be at the “lower end” of a CNY22.5 billion to CNY23.5 billion (USD3.16 billion to USD3.3 billion) range.

Bilibili [HKG: 9626] sank 11 percent to close at HKD89.90 (USD11.50) a share in Hong Kong today after its US-listed equity [NASDAQ: BILI] finished 11.1 percent down at USD11.86 yesterday.

“Due to lower-than-expected game revenues, we now expect our 2023 full-year revenues to be at the lower end of CNY22.5 billion to CNY23.5 billion,” Chen Rui, chairman and chief executive, said in a statement read out on his behalf during the company’s third-quarter earnings conference call today.

Revenue from mobile games fell for a fourth quarter in a row in the three months ended Sept. 30, sinking 33 percent from a year ago to CNY992 million (USD139 million), the Shanghai-based firm’s financial report showed yesterday.

It put the decline down to a high comparative base resulting from the release of Space Hunter 3 in summer last year as well as weaker-than-expected new game performance in the third quarter of this year.

Chen also responded for the first time to rumors about Bilibili terminating some video game projects. “The game industry has changed dramatically in the past two years," he said, adding that “at the beginning of the fourth quarter, we closely reviewed our in-house game development projects. We further streamlined our in-house development team and discontinued projects that did not meet our standards."

Chen further explained that in a saturated market, quality alone is not enough unless the game developer has top quality and the right timing. 

He mentioned three criteria for a new game to succeed: long-term operations, a top position in a niche market, and a focus on return on investment. “The copycat type of projects setup or the rat race type of research and development investment does not work anymore,” Chen said.

Bilibili’s third-quarter loss shrank 22 percent from a year ago to CNY1.3 billion (USD183.3 million) amid flat revenue at CNY5.8 billion (USD815 million) and a new user base milestone.

Its number of daily active users rose 14 percent to 102.8 million, passing 100 million for the first time. Meanwhile, the number of daily content creators jumped 21 percent. Nearly 1.7 million content creators generated income on Bilibili in the period, up 34 percent from a year ago, as the platform expands into fields such as home decoration, relationships, well-being, and autos. 

Income from value-added services and advertising rose by 17 percent to CNY2.6 billion and surged by 21 percent to 1.6 billion, respectively, while revenue from intellectual property derivatives fell 23 percent to CNY580 million.

Editor: Emmi Laine