NetEase Inc (NASDAQ:NTES) achieved a record high total net revenue of RMB105.3 billion in 2024, with RMB83.6 billion from games and related services.
The company successfully launched new game titles, such as Marvel Rivals and Where Winds Meet, which have garnered significant player engagement and set new industry standards.
NetEase Inc (NASDAQ:NTES) reported a 17% year-over-year growth in PC client games, with a 57% increase in Q4, driven by strong performances from titles like Westward Journey Online II.
Youdao, a subsidiary of NetEase Inc (NASDAQ:NTES), achieved its first-ever annual operating profit in 2024, with a focus on technology-driven innovation and profitability enhancement.
NetEase Cloud Music continued to drive quality development, expanding its music library and enhancing user engagement through innovative features like Lyric book and Liveo.
Negative Points
NetEase Inc (NASDAQ:NTES) experienced a decline in learning services revenue for Youdao, leading to a 9.5% year-over-year decrease in Q4.
NetEase Cloud Music's net revenue decreased by 5% year-over-year in Q4, reflecting lower revenue from social entertainment services.
The company's gross profit margin for games and related services decreased to 66.7% in Q4, down from 69.5% in the same period last year.
NetEase Inc (NASDAQ:NTES) faced challenges in maintaining high gross profit margins for Youdao, which decreased to 47.8% in Q4 from 49.9% the previous year.
The company reported a decrease in net revenue for innovative business and others, down 17% year-over-year in Q4, primarily due to decreased revenue from advertising services and other innovative businesses.
Q & A Highlights
Q: Concerning FragPunk, could management share more about its data test achievements, preparations for launching, and post-launch operational priorities? What's the company's perspective on competition within the shooter game market segment? A: FragPunk has undergone large-scale testing in both domestic and overseas markets, with feedback meeting expectations. Players appreciated the innovative gameplay and system design. After months of iteration, the game is ready for launch. Post-launch, NetEase will monitor player feedback, update levels, provide new characters, and address cheating behaviors to maintain a healthy gaming environment. The company is confident in FragPunk's success due to its unique style and system design.
Q: What is the next stage monetization strategy for Where Winds Meet, and what improvements can we expect? Also, what are the overseas launch plans for this title? A: Where Winds Meet has shown solid performance with robust metrics. The monetization strategy focuses on cosmetics, which has been well-received. The company plans to infuse new content, enrich the open world, and create diverse gameplay experiences. For the overseas launch, NetEase is working on an overseas version and aims to present it to international players within 2025.
Q: Regarding Marvel Rivals, can you share more about the paying propensity and next growth strategies? Will there be expansions in marketing or e-sports? A: Marvel Rivals has gained wide acclaim, especially after Season 1. NetEase plans to continue investing in development and marketing, with a long-term operational strategy. The team has plans for eSports and will announce these plans to enhance the gaming ecosystem. There will also be crossover events and promotions with other media to expand the user base.
Q: What are the company's expectations for Overwatch's relaunch in China, and how will NetEase balance Marvel Rivals and Overwatch? A: The expectations for Overwatch are similar to those for World of Warcraft and Hearthstone. The aim is to revitalize the product and reach new highs. Both Marvel Rivals and Overwatch are excellent superhero shooters, and the market is large enough to accommodate both games. NetEase will strive to meet the diverse demands of their respective player communities.
Q: How does the user and growth trend look for World of Warcraft and Hearthstone after the initial boost from pent-up demand? What are the next steps to improve the longevity of these titles? A: Six months post-return, World of Warcraft and Hearthstone are performing better than ever. While normalization is expected, NetEase is closely collaborating with Blizzard to plan upcoming content to reignite player engagement. The company is committed to addressing feedback from Chinese players to improve their gaming experience.
