Our reporters Xu Xinyi and Wu Kezhong reported from Beijing
In the first quarter of 2023, NetEase's game business raised its eyebrows: its game and related value-added service revenue increased by 7.6% year-on-year, driving the company's revenue up 6.3% year-on-year. Among them, the popular "Egg Boy Party" during the Spring Festival contributed to the "Egg Boy Party".
As a casual competitive game, Egg Party was not noticed at the time of its launch, but during the Spring Festival in 2022, downloads and revenue suddenly rose, attracting industry attention. Because of its high MAU (monthly active users) and activity, research institutions call it a "national mobile game".
The gameplay of "Egg Party" itself is simple and easy to play, the krypton gold mode is acceptable to players, and the egg boy image is cute and cute, laying the foundation for the fire. The industry believes that the high-frequency update of "Egg Party" and the introduction of UGC mode have become important factors that promote the game to become a hit.
New "National Mobile Game"
On May 25, NetEase disclosed its financial report for the first quarter of 2023, showing that the company achieved operating income of 25 billion yuan, a year-on-year increase of 6.3%, and net profit of 6.8 billion yuan, a year-on-year increase of 53.72%.
Among them, the operating income of games and related value-added services was 20.1 billion yuan, a year-on-year increase of 7.6%. Net revenue from online games accounted for 92.7% of net revenue from games and related value-added services, and net revenue from mobile games accounted for 72.3% of net revenue from online games.
The growth of NetEase's game business, in addition to the classic flagship game products such as "Fantasy Westward Journey" and "Westward Journey", as well as boutique games such as "The Fifth Personality", "Against the Water and Cold" and "Qiannu Ghost", is also driven by the growth of the new game "Egg Party". According to the financial report, "Egg Party" has grown strongly in the number of users, and the game ecology has been further improved, topping the Chinese iOS game download list in the first quarter. "Our flagship games continue to be popular and engaged, while new games such as Egg Party have further expanded and enriched our user community." NetEase CEO Ding Lei said.
In the quarter, NetEase's games and related value-added services achieved gross profit and gross margin growth. According to the financial report, the increase in gross profit was mainly due to the increase in revenue from online games such as "Egg Party" and the one-time recognition of the copyright fees of several agency games in the operating cost in the previous quarter.
"Egg Boy Party" is open beta in May 2022, is a Jelly Guy-like game owned by NetEase - players play the "Egg Boy" and other "Egg Boys", pass levels or survive in various maps, and determine the ranking after layers of elimination.
At the beginning of its launch, Egg Party was a little-known casual game. Before the arrival of the Spring Festival in 2023, "Egg Party" began to enter the public's field of vision, and it became a popular product during the Spring Festival.
According to data from Sensor Tower, a third-party research institution, after "Egg Party" launched the linkage activity of "Pleasant Goat and Big Big Wolf" on December 30, 2022, game revenue climbed rapidly, ranking first in China's iOS mobile game download list and 18th in the revenue list that month, which was the first time to enter the TOP20 of the list.
During the Spring Festival, "Egg Party" continued to usher in significant growth. Sensor Tower pointed out that "Egg Party" became NetEase's mobile game revenue product in January, bringing publishers a 17.5% month-on-month increase, and jumped to 5th place in the mobile game revenue list of China's App Store.
In the following 2-4 months, "Egg Party" ranked 6th, 4th and 5th in China's App Store mobile game revenue list, second only to long-term list overlords such as "Honor of Kings", "Peace Elite" and "Genshin".
Egg Party's revenue growth was built on a huge user base.
Sensor Tower pointed out in March this year that since December last year, "Egg Party" has topped the Chinese iOS mobile game download list for four consecutive months, and since January it has ranked second in the domestic iOS mobile game MAU ranking.
NetEase's fourth-quarter 2022 financial report pointed out that the casual competitive mobile game "Egg Party" grew strongly in revenue and user numbers in the Chinese mainland market, becoming the game with the highest number of daily active users in NetEase Games' history.
Until May this year, "Egg Party" revenue ranking has declined, ranking 10th in Sensor Tower China App Store mobile game revenue list.
The hot way to "get out of the loop"
Regarding the reason why "Egg Party" became popular after more than half a year of fermentation, Zhang Shule, a commentator in the game industry, told the "China Business News" reporter that casual games are indeed the most likely to be popular "out of the circle" during the holiday period, provided that the experience of the product is different from the games on the market.
As a party game, Egg Party itself has strong social attributes and competitive gameplay, which is unique among casual games. According to the January 2023 Game Industry Report, a third-party research organization, Gamma Data, this is one of the reasons why "Egg Party" can maintain high popularity during the Spring Festival.
The massive growth of Egg Party drove the growth of the entire casual game category in January and even in the first quarter. Gamma data pointed out that although the leisure category is a new category that has entered the top 50 in the past two years, the segmentation gameplay that drives the rise of the category flow is different, which means that there may be more subdivision gameplay in the future to raise the upper limit of the category potential.
The high frequency of updates is also a big secret to maintaining the popularity of "Egg Party".
According to Gamma data, "Egg Party" has undergone up to 4 major version updates in January, and the new season of "Music Star Project" began in January. Among them, the rich content available for consumption provides a guarantee for the growth of product flow.
Sensor Tower pointed out that "Egg Party" "Elf Voice" was launched on March 3, and both turnover and March revenue hit a record high on that day, and drove NetEase mobile game revenue to increase by nearly 11% month-on-month.
At the end of March, "Egg Party" updated the "Egg Festival" version. In this version, the product is linked with the popular werewolf killing game "Goose and Duck Kill" at the beginning of the year, and the "egg boy kill" gameplay is launched - players are divided into three camps: good eggs, bad eggs and neutral, and the gameplay mechanism is the same as "Goose Duck Kill". For a time, the anchors of "Goose and Duck Kill" and the anchors of "Egg Boy Party" have team-built in "Egg Kill", contributing many famous scenes and bringing a wave of heat to the game.
In addition, the UGC (User-generated content) model of "Egg Party" is also the direction of the game industry's attention. "Egg Boy Party" has a built-in "Egg Boy Workshop" (level editor), which provides basic materials such as objects, traps, and decorations for players to create their own maps.
According to Gamma Data's "Game Industry Report from January to March 2023", NetEase Games has carried out several iterative upgrades to the map editor of "Egg Party", and continuously introduced cross-industry linkage objects to enrich content creation materials to promote the diversified development of player creation. The diversified content of secondary creation increases the activity of players, and gradually forms a positive ecological cycle. The report believes that the construction of the UGC ecosystem is also one of the important factors to help the good performance of the game.
Regarding the revenue model, version update, UGC model and other issues of "Egg Party", the reporter contacted NetEase for an interview, but did not receive a reply as of press time.
Earlier, the relevant person in charge of another popular party game "Sausage Party" told reporters that the UGC model can allow more players or content producers to join the content production, which will help the growth of the game, "If the game needs to carry DAU as the goal, then UGC is an inevitable problem to solve."
Zhang Shule told reporters that custom maps or other UGC modes can make users more engaged, which is quite similar to "Minecraft" (also a NetEase agent in China). Minecraft is another type of open-world game, unlike an open world that is not modifiable by users like Genshin. However, UGC is often only suitable for casual games, and cannot appear in heavy games with strong battle demand, high game balance requirements, and strong world view settings, so it is only a supplement, not a mainstream.
Take advantage of the momentum and set sail to sea
In the conference call after the release of NetEase's first quarter earnings report, Ding Lei said that "Egg Party" has achieved good results so far, and NetEase is very confident that it will continue to become a popular family game in the next 2 to 3 years. He also revealed: ""Egg Party" will also have plans to develop overseas, and NetEase has a good grasp of the future product roadmap. ”
NetEase has been practicing games on the road to the sea for a long time. Sensor Tower China's mobile game publishers' revenue list in May showed that NetEase ranked third in terms of revenue from the global App Store and Google Play, behind Tencent and Mihayou. NetEase said that its games cover a wide range of genres, including FPS "Wilderness Action" and "End of the Battlefield", asymmetric confrontation competitive "The Fifth Personality" and "Tom and Jerry: Chase", survival "After Tomorrow", SLG "Land's Coast" and multiplayer action competitive game "Forever Destroyed". Netease said that the fairy elements contained in "Eternal Calamity" and the Three Kingdoms elements in "The Coast of the Land" are very popular overseas.
In terms of overseas operations, NetEase said that its strategy is IP linkage and e-sports, which not only allows a variety of games to enter the Southeast Asian, Japanese, European and American markets, but also extends the life cycle of the game itself.
In addition to "Egg Party", NetEase's first-quarter earnings report also revealed that "Harry Potter: Magical Awakening" will be launched in overseas markets this summer. "Harry Potter: Magical Awakening" is an RPG mobile game independently developed by NetEase after obtaining the official authorization of the original Harry Potter work, which will be launched in China in 2021, with a turnover of more than 1 billion yuan in the first month. However, during the Spring Festival in 2022, due to the controversy of "Harry Potter: Magical Awakening" "excessive krypton gold", the entry "10,000 people please resign Harry Potter Magical Awakening Plan" appeared on the hot search. At present, "Harry Potter: Magical Awakening" has faded out of the top of the revenue list.
In contrast, the profit model of "Egg Party" is more accepted by players - the consumption point of the game is mainly in the skin, not the character's combat power. On the mobile gaming forum TapTap, some players introduced: "The krypton gold thing is voluntary, and it does not affect the balance of the game. Some players believe that the game has a certain tendency to induce krypton gold, but it can also be played without krypton gold: "I can't stop pumping, and there will be an obsession of 'I must collect it (season blind box)'".
Whether "Egg Party" can continue its domestic success after going to sea is still unknown. Overseas, the Jelly Guys mobile game Stumble Guys has also experienced explosive popularity. According to Sensor Tower data, among the top 10 global mobile game downloads in July 2022, Kitka Games Stumble Guys became the top 1 with 30.5 million downloads, and its downloads were 10 times that of July 2021. Indonesia is the number one market for the game, contributing 19.4% of downloads; It was followed by the United States with 10.4%. After Egg Party, it will have to face head-to-head battles from similar games.