Per reporter: Li Jianning Zhu Peng Per editor: Dong Xingsheng
Recently, NetEase (9999. HK) disclosed its first quarter 2022 results report. According to the financial report, NetEase's net income in the first quarter of this year was about 23.6 billion yuan, an increase of 14.8% year-on-year, and the gross profit margin was about 54%.
For game companies, products are the heart and the lifeblood of R&D manufacturers. In April 2022, although the game version number was resumed after a gap of 263 days, for the game manufacturers who "bitter version number jiuyi", the first batch of only 45 game version numbers can hardly be called "long drought and ganlin". Therefore, turning to tap the long-term operational vitality of existing products and opening up overseas markets may become an inevitable choice for the industry.
NetEase CEO Ding Lei said in the analyst meeting after the release of the financial report that at present, netease game overseas market revenue accounts for more than 10%, and it is hoped that the proportion of overseas markets can reach 40% to 50% in the future.
In the first quarter, the net revenue of online games accounted for more than 73%, focusing on long-term IP operations
According to the financial report, in the first quarter of 2022, the net revenue of NetEase's online game services was about 17.3 billion yuan, an increase of 15.3% year-on-year, accounting for more than 73% of the overall revenue in the first quarter, continuing to serve as NetEase's revenue engine. Among them, the net revenue of mobile games accounted for 66.9% of the net revenue of online game services, compared with 72.8% in the same period last year.
In addition, during the reporting period, net income of NetEase Cloud Music was about 2.1 billion yuan, an increase of 38.6% year-on-year, and net income from innovation and other businesses was about 3 billion yuan, an increase of 11.5% year-on-year.
NetEase 2022 first quarter financial report main data Film source: financial report screenshot
Previously, Tencent (0700. HK) also released its first-quarter earnings report, with game revenue accounting for about 32% of its first-quarter revenue. The game business of the two companies has a significant difference in the proportion of revenue.
A senior analyst who did not want to be named said in an interview with every reporter's WeChat on May 25: "Although NetEase also has a variety of businesses such as NetEase Cloud Music, NetEase Youdao, NetEase Yanxuan, and advertising revenue, from the perspective of revenue structure, NetEase is still a relatively pure game company. From the perspective of growth, Yanxuan and NetEase cloud music businesses may maintain certain growth in the future. ”
For NetEase, which is based on the game business, it is not surprising that it continues to increase the vertical development of the game.
Previously, "Diablo: Immortal", developed by NetEase and Blizzard Entertainment, has been officially announced that it will be launched overseas and Chinese and Southeast Asian markets on June 2 and June 23 this year. It is reported that the "Diablo" series is a game created by Blizzard Entertainment in 1995, and after years of iteration, it has become a global IP. At present, this mobile game based on IP has received more than 35 million reservations worldwide, of which more than 15 million are booked in China.
Diablo: Immortal promotional poster Image source: Courtesy of NetEase
At a time when content is flooded and competition homogenization is intensifying, the benefits that an IP-type game can bring are enormous. According to the financial report, NetEase's revenue growth in the first quarter mainly came from the eye-catching performance of boutique games such as "Harry Potter: Magic Awakening" and "Forever Doom"; at the same time, the performance of classic games such as the computer version of "Fantasy Journey to the West" and "Journey to the West 2" is still stable, showing the long-term vitality of big IP.
In NetEase Games' "520 Online Conference" this year, it is an obvious trend to further expand and strengthen the new and old IP.
The above analysts believe that in the game industry, it is indeed difficult to create new IP, but NetEase has also had successful cases, such as "Yin and Yang Division", and there was no IP halo protection at the beginning. "At the end of the day, it's still a matter of quality. As long as the company can make a good enough quality game, it will become an IP. ”
As the most successful new IP of NetEase in recent years, in the past six years, "Yin yang division" has derived a product matrix covering RPG, MOBA, CCG and other multi-track tracks. At the 520 press conference, NetEase also announced the new animation "Monster Witness" plan of "Yin and Yang Division", a new music plan, and an immersive digital art exhibition. In addition, old IPs such as "Journey to the West" and "Journey to the West" and new dark horses such as "Harry Potter: Magical Awakening" and "Forever Doom" also disclosed new trends at the press conference.
2022 NetEase Game 520 Conference Image source: NetEase Game Weibo
However, compared with previous 520 conferences, only 48 products appeared at this year's conference, and most of them did not appear for the first time.
In the view of zhang Shule, an analyst in the game industry, this year's press conference shows NetEase's pursuit of R&D quality and cultural taste under the global IP strategy, which means that NetEase is upgrading from a "big money maker" to a "strong quality factory", seeking to win with product quality rather than "bumping" with the number of products.
Ten months have not obtained a new version number, and NetEase has accelerated its overseas layout
In terms of new product dynamics, in addition to "Diablo: Immortal", the strategic battle mobile game "Roar of War", which has been developed for 5 years, was officially launched on May 26, which is NetEase's first public beta mobile game this year, and another casual competitive mobile game "Egg Boy Party" will open the public beta on May 27.
Every reporter found that "Roar of War" got the version number as early as September 2020, and "Egg Boy Party" was the last game version number approved by NetEase before the 2021 version number was discontinued. In the first batch of 45 game versions that resumed distribution in April this year, NetEase did not get a new version number.
Or under the pressure of tightening the version number, more and more game companies will focus on overseas markets, and NetEase's global strategic layout has further accelerated.
In the top ten lists of Overseas Revenue Growth of Chinese mobile games released by Sensor Tower in April 2022, NetEase's "Fifth Personality", "Heavenly Oracle" and "After Tomorrow" are all on the list. Among them, the launch of the Japanese service version of the "Celestial Oracle" made the overseas income of the product in April 5.5 times that of March, and 86.7% of the revenue came from the Japanese market. It is reported that the overseas version of Harry Potter: Magical Awakening has also been put on the agenda.
April 2022 China Mobile Game Overseas Revenue Growth Ranking Image source: Sensor Tower
In addition to products going overseas, talent layout is also accelerating globalization. In May this year, NetEase established its first game studio in the United States, dedicated to the development of PC and console games. It also acquired Kusanagi Studios, a well-known developer of the Heroes No More series in Japan, last year, and in January this year, it established Nagoshi Studios in Japan led by the well-known game producer Minoru Koshi. It is reported that at present, NetEase's overseas game studios have covered Japan, North America and other places, and will develop new works for the global market.
In the analyst meeting after the release of the financial report, NetEase CEO Ding Lei said: "At present, netease game overseas market revenue accounts for more than 10%, and it is hoped that this proportion can reach 40% to 50% in the future." At the same time, NetEase hopes to cooperate with more overseas excellent teams to let them participate in content development. ”
"There are many host-side R&D forces overseas, which are different from domestic product categories, and the differentiation of this category can bring a lot of new ideas to NetEase's globalization and game research and development." Even Tencent is actually doing the same thing. Many overseas game manufacturers also hope to turn to mobile game research and development, which is a mutually beneficial thing. The analyst, who did not want to be named, said.
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