A few days ago, NetEase announced its fourth quarter and annual financial report for 2021. According to the financial report, NetEase's net income in the fourth quarter was 24.4 billion yuan, an increase of 23.3% year-on-year. In 2021, the company's net income was 87.6 billion yuan, an increase of 18.92% year-on-year.
Among them, the game business maintained steady growth. In 2021, net revenue from NetEase's online gaming services was about 62.8 billion yuan, and in 2020, it was about 54.6 billion yuan, an increase of 15.01% year-on-year. Net revenue from online gaming services in the fourth quarter of 2021 was approximately $17.4 billion, up 29.8% year-on-year.
With the continued strengthening of supervision of the protection of minors and the suspension of the issuance of game version numbers, the game industry has been moving forward in the past year, but the market performance of high-quality content proves where the focus of game companies should be. In a conference call on the day of the earnings report, NetEase CEO Ding Lei said: "There has been no release number in China for a long time, and overseas market development and producer investment are NetEase's very firm strategic policies. ”
The annual net revenue of online games exceeded 60 billion for the first time
Linkage cultural IP expands the influence of "Chinese style"
According to the financial report, in 2021, the net revenue of NetEase's online game services will be about 62.8 billion yuan, breaking through the 60 billion mark for the first time. Among them, the net revenue of mobile games accounted for 70.4% of the net revenue of online game services, compared with 71.9% in the previous year.
NetEase Fiscal Year 2021 Online Games and Net Income Data Image Source: Screenshot of Earnings Report
The steady development of the game business is inseparable from the long-term operation of many classic IP of NetEase. The financial report shows that the flagship products of the Fantasy Journey to the West and the Journey to the West series continued to maintain steady development in the fourth quarter. Taking "Fantasy Journey to the West" as an example, this game, which was born in 2003 against the background of the "Journey to the West" story, has maintained its vitality for nearly 20 years and is still one of the revenue pillars of NetEase's game business.
The long-term operation capability of classic IP is also an important ability of NetEase to resist external uncertainties. The domestic game version number has not been issued for many months since July 2021, and some game companies that lack long-term IP operations are facing survival difficulties.
On the afternoon of February 21, a message that "the game company will not issue a new version in 2022" caused an uproar. With the fermentation of the news, the stock prices of many game companies fell in response, and then the "Daily Economic News" reporter asked for verification to refute the rumors. But it also shows the industry's desire for version numbers.
At a time when the external environment is constantly changing and the market demand is dynamically changing, relying on "classic" is not a realistic strategy. Therefore, NetEase has also been launching new products.
Developed by NetEase's 24Entertainment Studio, a buyout martial arts competitive end game "Forever Doomed" opened a public beta on Steam in August 2021, and announced on November 10 that product sales exceeded 6 million, setting a new record for domestic buyout game sales. The game was also included in steam's 2021 Best Games list as a "best-selling game."
With the help of universal studios in Beijing, the IP card mobile game "Harry Potter: Magical Awakening" quickly topped the iOS best-seller list and remained for a week after the launch, which is undoubtedly one of the explosive mobile games in 2021.
From the perspective of game content, NetEase continues to exert efforts in the linkage between games and culture. Taking "Eternal Destruction" as an example, it carried out a number of Chinese cultural IP linkages in the fourth quarter. In November 2021, "Forever Doom" cooperated with the Pingyao Wentaofang Ancient Weapons Museum to integrate the treasure of the town hall", "Horse Head Knife", into the game. It is reported that in order to watch the prototype, 6 million netizens logged on to the official website of the Pingyao Ancient Weapons Museum, which once led to server downtime. In December of the same year, the official linkage between "Forever Doom" and Bruce Lee also attracted much attention.
"Forever Doom" linkage Bruce Lee poster Image source: Provided by NetEase
High-quality content superimposed on high-quality traditional culture, in the current situation of constantly emphasizing "cultural self-confidence", this move makes the game release come with its own topic, and also boosts the global online users of "Forever Doom" to a new high.
Power Game "Globalization"
The future will continue to open up the metaverse
On the earnings call, NetEase also announced its new product plan, and "globalization" will be the focus of future efforts.
NetEase executives said that "Forever Doom" will launch a console version and a mobile version, while the localization of "Harry Potter: Magic Awakening" in various regions is progressing smoothly, and it has earlier conducted internal tests for overseas players in the Nordic region. NetEase will work with Warner Bros. this year to jointly release the product in the United States, Europe and Japan.
Ding Lei, CEO of NetEase, also said: "NetEase is accelerating the global digital culture layout and continuing to expand the influence of 'Chinese style' culture. ”
Harry Potter: Magical Awakening Chinese New Year Event Image Source: Provided by NetEase
Looking back at the development and changes of the game industry in the past year, the suspension of the issuance of game version numbers is undoubtedly an important external factor that promotes game companies to go overseas, but the slowdown in the growth of the domestic game market also promotes capable game companies to accelerate their global layout.
A securities analyst who did not want to be named told every reporter: "From the perspective of the industry, there are two reasons for the globalization of game companies. The first is that the growth rate of the overseas game market is faster than that of China, and the current growth rate of the domestic normalized game market is about 8 points, but the overall growth rate of the overseas market is close to 20%. The second is to conform to the national strategy of 'culture going to sea'. In addition, coupled with the normalization of supervision that the game industry may face in the future, many game companies will do global projects when they set up projects. ”
According to Gamma data, the actual sales revenue of the domestic mobile game market in 2021 was 225.54 billion yuan, an increase of 7.6%, and the growth rate fell to single digits for the first time. The scale of mobile game users in China increased by only 0.2%, and the willingness of users to spend also weakened.
NetEase's game globalization path has also been expanding with the expansion of the game's overseas influence. In January this year, NetEase cooperated with The Dragon Series, Japan's best-selling "Rulong" series of game producers named Minoru Yue, to set up a game studio in Tokyo, which will create top game works for the world. In recent years, many of Japan's top game producers, such as Tetsuya Akatsuka and Tsuyoshi Suda, have joined NetEase.
In the earnings call, NetEase executives also mentioned the company's thinking on the layout of the "meta-universe". NetEase executives said: "NetEase has many years of experience in operating large-scale MMORPGs (massively multiplayer role-playing games), and has accumulated rich experience in building meta-universe social and economic models. In the future, NetEase will continue to explore the opportunities of the metaverse from two directions, one is to add offline combination in the game; the other is to consider continuing to develop a large metaversal world under the existing game technology. ”
The above-mentioned securities analyst said: "The game company will certainly be one of the core main forces of the metacosm in the future, because in essence, the metacosm can be understood as a global multiplayer online MMO." NetEase's experiments in the metaverse are good, like they have been developing VR games since a few years ago. For NetEase, the relevant operational experience is very valuable, but I think there is still a long way to go before building a real meta-universe. ”
Reporter | Zhu Peng
Edited | Duan Lian, Dong Xingsheng, Du Bo
Proofreader | Sun Zhicheng
| the original article of the daily economic news nbdnews |
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