Cover news reporter Meng Mei Zhang Yuexi intern Chen Zeyu
On August 31, NetEase released its financial report for the second quarter of 2021. According to the financial report, in the second quarter, NetEase's revenue was 20.5 billion yuan, an increase of 12.9% year-on-year, higher than the market expectation of 20.465 billion yuan; the net profit attributable to the mother was 3.542 billion yuan, down 21.9% year-on-year, also higher than the market expectation of 3.321 billion yuan.
From the perspective of business situation, in the second quarter, NetEase's online game service revenue was 14.5 billion yuan, an increase of 5% year-on-year; Youdao revenue was 1.3 billion yuan, an increase of 108% year-on-year; and innovation and other business revenue was 4.7 billion yuan, an increase of 26% year-on-year. Online game services, Youdao, innovative business and others are netease's three main businesses, the above three in the third quarter of the revenue accounted for 70.7%, 6.3% and 22.9% respectively. Although the revenue of the three major businesses still maintained rapid growth year-on-year, the revenue of online games and Youdao fell by about 3% month-on-month.
Judging from the proportion of revenue of NetEase's various businesses, games are still the bulk of NetEase. The epidemic has objectively accelerated the expansion of the game business. NetEase, which has changed to a boutique strategy, has become more and more obvious in overseas markets this year. The performance data of the 2021 domestic game "The Biggest Dark Horse" "Forever Doom" is an example.
In terms of innovation and other businesses, NetEase Cloud Music revenue has increased, and in the case of cost control, it has achieved a 26% year-on-year increase in revenue, it is worth noting that the gross profit margin in the second quarter increased to 19.3%, and the gross profit margin turned positive for the first time.
In addition, there are some bright data in the financial report. The number of omni-channel payment users in the second quarter of NetEase Yanxuan increased by 67% year-on-year; the number of Amoy channels increased by 153% year-on-year, and Douyin and Kuaishou increased by nearly 300% year-on-year. In the second quarter, the number of NetEase Yanxuan Pro members increased by 212% year-on-year, and the number of new card openers increased by 156% year-on-year.
Despite the good financial performance, the recent new regulations have caused NetEase's stock price to fluctuate. Earlier, the State Press and Publication Administration issued the "Circular on Further Strict Management and Effectively Preventing Minors from Addicting to Online Games," which further tightened management measures in response to the problem of minors' excessive use or even addiction to online games. However, from the financial report combined with Ding Lei's earlier disclosure, it can be known that netease minors' game flow accounts for less than 1%.
On the day of the release of NetEase's financial report, Tencent issued a statement giving up exclusive music copyright. The release of this statement means that the upstream copyright owner can authorize other operators on its own. This is good news for NetEase and a signal that the music industry is actively developing. However, whether we can take this opportunity to take more non-exclusive copyrights needs further observation, and after the cancellation of the exclusive copyright of music, the impact on the change of paid users for Tencent Music and NetEase Cloud is not immediately obvious.
The growth rate of game business revenue has slowed down, and the innovative business is facing new opportunities, for NetEase, there are many challenges in the future but the future can be expected.
Expert Reviews:
Yang Miao (Founder of Journalists' House and Senior Internet Observer)
NetEase is the second largest game company in China, but compared with The number one Tencent, NetEase's game revenue has always accounted for more than 70% of total revenue (Tencent's current ratio has been reduced to less than one-third). Leaving aside the "hidden differences" in bookkeeping methods, NetEase is a more typical game company than Tencent. Therefore, it will also become a barometer for the development of China's game industry.
In recent years, the state has carried out stronger and stronger supervision of minors' games, and the impact of this on game companies is still fermenting. Although companies are emphasizing the extremely low rate of underage payment, players who do not pay are a more important cornerstone part of online games. This can be seen from the fact that the growth rate of NetEase's game business revenue is only single digits.
However, games are one of the few fist industries in China's cultural industry that can be strongly exported, and in Southeast Asia and Japan, there are products that occupy a dominant position, and some independent games have even had an influence in Europe and the United States. At a time when domestic Internet traffic is approaching the ceiling, internationalization should and must become an option for major companies. For example, recent insiders have broken the news that NetEase plans to expand in Japan and is planning to poach sega to recruit the producer of the "Like Dragon" game series. After the completion of the accumulation in China, using the world's outstanding talents and resources to occupy the world's market should be the next step of our cultural industry.
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