The U.S. Stock Research Agency learned that on February 24, NetEase released the fourth quarter and full year of 2021 financial reports. According to the financial report, NetEase's net income in Q4 of 2021 was 24.4 billion yuan, and the net income of 2021 was 87.6 billion yuan. Under non-GAAP, net profit attributable to shareholders of the Company in Q4 2021 was RMB6.6 billion and net profit attributable to shareholders of the Company in 2021 was RMB19.8 billion.
NetEase CEO Ding Lei said that 2021 is a fruitful year, and NetEase's various businesses have developed steadily. In the past year, the company has focused on promoting the development of China's digital cultural economy and making Chinese cultural symbols go global. Focusing on the business areas of games, music, education, consumption, and media, NetEase has accelerated the global digital culture layout, and digital culture products have swept through more than 200 countries and regions, continuing to expand the influence of "Chinese style" culture.
In the fourth quarter, NetEase Games launched a number of self-developed new products, further enriching the diversified product matrix and demonstrating the strength of developing world-class game works. NetEase Cloud Music was successfully listed, the gross profit margin was positive for three consecutive quarters, and the number of independent musicians on the platform exceeded 400,000. Its education business NetEase Youdao achieved quarterly profitability for the first time, taking education and education as the incision of common prosperity, and actively exploring the innovative training model of digital talents.
NetEase Games: The "Chinese Style" masterpiece has been praised by users around the world, and cultural products have swept 200 countries
In 2021, NetEase Games launched a number of world-class self-developed products to innovate the cultural inheritance method in the game narrative, so that "Chinese style" won praise from users around the world. As a pioneer in the spread of Chinese culture, NetEase game users have covered more than 200 countries and regions. According to the financial report, the net income of NetEase Games in Q4 2021 was 17.4 billion yuan, and the net income of 2021 was 62.8 billion yuan.
Since its launch in August last year, NetEase's self-developed boutique "Forever Doomed" has rapidly swept the world, representing domestic games to compete in the international market and winning good results, and has been selected as the authoritative game platform Steam 2021 "Best Selling Game of the Year (Platinum)" and "Hottest New Product of the Year (Platinum)". At the same time, "Forever Doomed" accelerates the launch of e-sports to the sea, adding new impetus to the development of domestic e-sports. Recently, the first global e-sports competition of "Forever Doom" was successfully held, attracting more than 100 global e-sports teams to participate, including many top e-sports giants in Europe and the United States.
In the fourth quarter, "Forever Doom" carried out a number of Chinese cultural IP linkages, promoting the number of global online users to a new high. In November, "Forever Destroyed" cooperated with the Pingyao Wentaofang Ancient Weapons Museum to integrate the treasure of the town hall," "Horse Head Knife", into the game. In order to see the prototype, the player once "squeezed" the official website of the museum. In December, the official linkage between "Forever Doom" and Bruce Lee was well received, evoking the infinite yearning of overseas players for Chinese martial arts.
Also this quarter, Harry Potter: Magic Awakens continued to launch blockbuster content updates, repeatedly reaching the top of China's iOS download list and best-seller list. During the Spring Festival, Harry Potter: Magical Awakening innovated the traditional cultural inheritance form, launched a number of sets of national style character fashion, designed the "Chinese Dragon" fireworks special effect, and restored the game copy of Ren Beast in the "Classic of Mountains and Seas", making the digital world full of Chinese New Year flavor.
In addition, the flagship products of the Fantasy Journey to the West and The Journey to the West series performed well, and the new product "Absolute Interpretation" topped the China iOS download list. Soon, NetEase will launch the console and mobile game version of "Forever Destroyer", "Diablo: Immortal" and "Qiannu Ghost", etc., and will launch "Harry Potter: Magical Awakening" in overseas markets.
NetEase Cloud Music: Positive gross profit margin in 2021 Four pioneering initiatives empower 400,000 independent musicians
With the listing of NetEase Cloud Music on the Hong Kong Stock Exchange, NetEase changed the presentation of segment information from the fourth quarter and disclosed the performance of Cloud Music separately. At present, the segments disclosed by NetEase include online gaming services, Youdao, Cloud Music and Innovation and other businesses.
NetEase Cloud Music Q4 net income of 1.9 billion yuan, 2021 net income of 7 billion yuan. Thanks to the growth of net income and the improvement of cost control, Cloud Music's gross profit margin was positive for three consecutive quarters, and the Q4 gross margin increased to 4.1%. Gross margin for 2021 was 2.0%.
This quarter, NetEase Cloud Music launched four industry initiatives to continue to support independent musicians and empower the Chinese music ecosystem. Including the establishment of a one-stop Chinese music talent training class, for potential singers / music celebrities / celebrities to provide systematic music courses, one-on-one star mentor guidance, publicity, to create a road to fame; the industry's first support songwriters, arrangers, producers and other diversified identities of the musicians settled on the platform, the platform all advertising into the musicians divided; innovative launch of the music score function and the genuine "Music Score Collection" area, including more than one million pages of genuine music scores such as Bach, Mozart, Beethoven, etc., to provide convenience for the majority of music lovers, Basic resources; Recently, BeatSoul, China's leading one-stop Beat (accompaniment) trading platform, was officially launched, opening up trading and music exchange channels for talented producers and rap music lovers, and 100% of the revenue belongs to the producers.
Through a series of industry innovation support measures, the number of independent musicians and behind-the-scenes creators settled in NetEase Cloud Music has been greatly improved. By the end of 2021, the number of independent musicians in NetEase Cloud Music exceeded 400,000, and the number of creators behind the platform doubled year-on-year. This year, the 53-year-old Dou Wei uploaded a total of 94 musical works in Yuncun, known as the "Yuncun Liver Emperor"; after the launch of the Yuncun Creation System, the fans of Tang Tian, the lyricist of "The LoneLy Warrior", soared from single digits to 70,000.
NetEase Cloud Music is also helping Chinese original music to reach more overseas listeners. In 2021, NetEase Cloud Music added many overseas distribution and promotion channels, transferring tens of thousands of overseas works; China's original music from NetEase Cloud Music has been played on overseas platforms with a total playback of more than 10 billion. Among them, chinese original songs such as "Tobacco Bag Street" and "囍" have exceeded 1 billion plays on overseas platforms.
In the fourth quarter, NetEase Cloud Music has reached an open copyright cooperation with 5 mainstream record companies/copyright holders, including Modern Sky, Hong Kong Emperor Entertainment, China Record Group, Fenghua Qiushi and Lehua Entertainment, and obtained full music copyright authorization. At the same time, we will continue to broaden the sound consumption scene, and launch The audiobook content of China's top science fiction IP such as "Three-Body Problem" and "Space Odyssey" to provide users with more high-quality consumer content.
NetEase Youdao: For the first time, it has achieved profitability and innovated digital talent training methods
In 2021, NetEase Youdao actively responds to the national education policy, transforms the focus of business, aims at the four major tracks of intelligent hardware, quality education, adult education, and education informatization, strengthens investment in content and technology, innovates digital talent training methods, and promotes the implementation of the strategy of talent power in the era of digital economy.
In the fourth quarter, NetEase Youdao's net income reached 1.3 billion yuan, an increase of 21% year-on-year; in 2021, the net income was 5.4 billion yuan, an increase of 69% year-on-year. Under non-GAAP, Youdao achieved quarterly profitability for the first time and its financial health continued to improve.
In 2021, youdao intelligent hardware net revenue of 1 billion yuan, an increase of 82% year-on-year. In the fourth quarter, Youdao Dictionary Pen strategically cooperated with the Commercial Press to exclusively include the Xinhua Dictionary to broaden professional learning content; online writing guidance function, which can accurately identify and AI intelligently evaluate English handwriting texts. With its content and technical advantages, Youdao Dictionary Pen was officially selected by the 2022 Boao Forum for Asia as the only designated intelligent translation dictionary pen.
The transformation of youdao quality courses has made good progress. AI Go product "Youdao Zongheng" grew strongly, with Q4 sales up about 130% year-on-year. The Youdao Zongheng Chess Academy APP is independently launched, and the AI game system is opened for free to expand the coverage of quality course users. In November, Youdao Quality Growth Center opened in Beijing, which is the first offline direct school of NetEase Youdao and the latest attempt by Youdao to explore offline quality education.
In the fourth quarter, NetEase Youdao reached a strategic cooperation with the Suzhou Municipal Government to set up a regional headquarters of "smart education" in Suzhou to help Suzhou education explore and innovate in the direction of artificial intelligence, teaching digitalization, and teacher information literacy. Recently, NetEase has reached a school-enterprise strategic cooperation with Zhejiang Media College for core businesses such as education, and jointly established the "NetEase Industry College of Zhejiang Media College", focusing on the field of digital economy and carrying out in-depth cooperation such as talent training, scientific research innovation, and industry-university integration.
Innovative business: NetEase strictly selected omni-channel users to increase by more than 80%, NetEase Media to create a feast of ice and snow content
NetEase Yanxuan, NetEase Media's innovation and other business sectors have developed steadily. In the fourth quarter, the innovation sector had a net income of 3.8 billion yuan and a net income of 12.4 billion yuan in 2021.
NetEase's strict branding strategy has shown results, and omni-channel sales and paid members have increased steadily. In 2021, NetEase's strictly selected omni-channel users increased by more than 80% year-on-year; in the fourth quarter, the number of Pro members increased by 134% year-on-year. During the Double 11 period, NetEase Yanxuan's omni-channel order volume increased by 52% year-on-year, Jitter's channel sales increased by 178% year-on-year, and the number of new pro members increased by 249% year-on-year.
NetEase Media insists on upgrading content consumption. QuestMobile data shows that in 2021, the average monthly single-day use of NetEase news clients is as long as 110 minutes, ranking first in the industry in the past two years. During the Beijing Winter Olympics, with the help of cooperation with China Ice and Snow, NetEase Culture and Creativity and NetEase News jointly planned to launch a rich feast of ice and snow content, activate user emotional resonance, and help achieve the goal of "300 million people participating in ice and snow sports".
In 2022, NetEase will further polish its core businesses and launch more high-quality products and content.