Produced by Tiger Sniff Commercial Consumer Group.
Written by Huang Qingchun.
Title Diagram Visual China.
There are two things in the world that can make people really happy, one is eating, and the other is playing" - now looking back on Ding Lei's words, it is really a prophecy -NetEase is still the most topical topic on the Internet at the moment, games and pig farming.
In fact, NetEase's reliance on the game business is becoming more and more significant: on February 29, NetEase handed over its 2023Q4 and annual financial report to the market: 2023 annual revenue exceeded the 100 billion mark and reached 103.5 billion yuan, a year-on-year increase of 725%；Non-GAAP net profit was 32.6 billion, a significant increase of 4298%。
Among them, games are still NetEase's core blood pumping business: in 2023, the revenue of the game business will reach 81.6 billion yuan, a year-on-year increase of 94%, accounting for 788% - Previously, the proportion of game revenue dropped to less than 60% when NetEase increased e-commerce (mainly due to the high revenue of cross-border e-commerce before Kaola**, and the proportion of revenue from each business after Koala** will naturally change greatly); But after NetEase focused on the game after nearly two years of hibernation, it was full of attacker attitude.
Especially in 2023, NetEase's new and old games will be in full bloom:
On the one hand, products such as "Fantasy Journey to the West", "Journey to the West", "Onmyoji", and "Egg Boy Party" (launched in May 2022) still maintain stable revenue capacity;
On the other hand, the six games launched by NetEase in 2023 (in chronological order, "Journey to the West: Return", "Extraordinary Pioneer", "Peak Speed", "Against the Cold" mobile game, "All-Star Street Ball Party" and "Three Kingdoms Commanders") have a hit rate of up to 50%.
NetEase's four new games in the last month (1.25-2.25) IOS** performance, dotted data.
The bright performance of the game business in 2023 is most directly reflected in NetEase's stock price: as of press time, NetEase's market value has surpassed that of Meituan, JD.com, and other Chinese Internet companiesclimbed to the TOP4 position, second only to Tencent, Alibaba, and Pinduoduo-- Goldman Sachs, HSBC, Morgan Stanley, UBS, and CICC have all ** or overweight ratings.
JPMorgan Chase & Co. even opened the "boast mode" in the research report, reiterating that NetEase is one of the preferred stocks of China's Internet, and it is believed that it will continue to outperform its peers in 2024 - with the launch of several new games this year, the stock price will be ** in the next 3 to 6 months.
The post-00s carried NetEase
According to NetEase's 2023Q4 financial report, the net income of NetEase games and related value-added services was 20.9 billion yuan, an increase of 10% over the same period, mainly due to the pull of new games such as "Egg Boy Party", "Peak Speed", "Against the Cold" mobile game, and "All-Star Street Ball Party".In particular, "Egg Boy Party" has earned enough attention and money for NetEase.
"Egg Boy Party" has just been launched, and the priority and group resources are limited, but it has stepped on the social fission of the 2023 big holiday (winter vacation and Spring Festival) + UGC content, and the topic and user volume have exploded in a short period of time, and the speed of DAU rush far exceeds industry expectations. People close to the "Egg Boy Party" project said to Tiger Sniff.
The above-mentioned person further pointed out that when NetEase's new games are launched, NetEase Dashen, Treasure Pavilion, and live broadcast platforms that are biased towards product operation and service functions will form traffic linkage; As for external publicity, NetEase has gradually increased its cooperation with the Douyin platform (mainly advertising), and is actively trying some cooperation with Douyin.
You must know that Douyin's traffic advantage and entertainment tone, coupled with the young user base and the national short ** wave, are naturally suitable for the growth of casual games; Moreover, short ** and live streaming can show player-created gameplay and interesting party scenes, and the effect brought by the UGC mechanism is most obvious in terms of playability value and game longevity, which is in line with the social nature of party games - this is undoubtedly a reminder to game developers that it is time to re-examine the importance of social ** as a representative publicity channelIt is the general trend to shift more resources invested in traditional channels such as app stores to emerging channels.
In this regard, Wu Xinxin, vice president of NetEase game marketing, analyzed: "Previously, NetEase game marketing was mainly traffic-based, and a wide range of ** and promotion methods were used to strengthen public awareness; Now, marketing is shifting to a more social, emotional approach, and only by making players feel the pure joy of the game will naturally build interest in the product. ”
Tiger Sniff previously wrote that the reason why "Egg Boy Party" can successfully break through the post-00 group is mainly in two aspects: on the one hand, "Egg Boy Party" has strong interactive social attributes, and rich gameplay has become a new "social currency" for post-00s who pay attention to self-expression and have a stronger sense of group identity.
In this regard, Che Bin, the person in charge of the soul product center, said to Tiger Sniff, "From the perspective of product functions, the core of interest social interaction is stress-free social interaction, and meets the personalized social needs of each circle with diversified product functions; In particular, the post-00s rely more on 'cyber friends', and they don't need to be offline friends with each other" - this is precisely the new trend of post-00s social networking: circles have become an important reference for post-00s to make friends, and games are replacing independent dating apps to a certain extent.
On the other hand, the UGC system derived from "Egg Boy Party" has greatly broadened the boundaries of game exploration, not only providing players with a stage to freely create levels and self-made maps, but also fully mobilizing players' creative collisions, and more secondary content out of the circle - to put it bluntly, "Egg Boy Party" first connects players through content, and then influences core users with game reputation, so that a steady stream of UGC content spreads to mass users, thus causing extensive discussion on social platforms and forming player self-communication.
Currently, Egg Boy Party is updated every week, with a Party Season of 5 to 6 weeks. The producer of the project has revealed that the game can produce millions of UGC maps every week, and the number of players on some popular maps even exceeds 10 million - based on the active UGC creation ecology, a light social network has been built, so that "Egg Boy Party" can further penetrate potential party groups, and rich UGC materials are continuing to impact platforms such as Douyin and Xiaohongshu to maintain the freshness of players in "Egg Boy Party".
Previously, Kwan, the producer of "Egg Boy Party", pointed out in an interview with **, "The team of "Egg Boy Party" was originally a medium to small team size within NetEase Games. But after grasping the post-00s group, "Egg Boy Party" has gradually become NetEase's largest DAU (user daily active) mobile game.
Since then, "Egg Boy Party" has soared all the way to become the annual dark horse of the industry in 2023, attracting NetEase executives to mention "Egg Boy Party" 11 times at the 2023 annual report** meeting, Ding Lei even stated that he will concentrate his strength and resources to make Egg Boy a long-term product that has been in operation for 20 years - after all, NetEase is good at transforming old products such as "Fantasy Journey to the West", "Journey to the West", "Against the Cold" and "A Chinese Ghost Story" into long-term operation IP in China. Methods such as community operations and content updates to increase revenue.
Behind this, party games are undergoing obvious changes: in the past, the entire industry was casual and chess and other light games to complete user education, and then heavy games to complete the harvest; Now the whole logic has changed, and you can directly make light games heavy and complete the harvest - just like casual games are originally low sticky, but the rich gameplay of "Egg Boy Party" makes the whole game more and more complex, and casual parties are more and more in line with heavy games.
The bigger change is that NetEase is good at large-scale payment design, but "Egg Boy Party" is a big DAU + low payment threshold in terms of business model, and it is taking the path of "Glory of Kings".The success of "Egg Boy Party" just gave NetEase the opportunity to break through and reflect on its own ability range.
QuestMobile measures the user composition of Egg Boy Party.
However, the popularity of "Egg Boy Party" among the post-00s group has also brought the market to question the "young age" of its users - as the scale of users and the proportion of ARPU value of the post-00s (especially minors) increases, the challenges to the game's risk control and sustainable operation will also increase sharply.
In this regard, NetEase said in its 2023Q4 financial report that since the official implementation of the "Regulations on the Protection of Minors Online" on January 1, 2024, NetEase has actively responded to the requirements of the new policy and has become the first batch of industry manufacturers to add "minor mode" to all productsTo date, 63 products have been deployed.
NetEase withstood Tencent's accumulation of strength.
If the success of "Egg Boy Party" is UGC first, and the game is just a shell, then NetEase is leveraging precisely the game product path (light social characteristics) and traffic advantage (big DAU products) that Tencent was good at in the past - according to Southwest **, "Egg Boy Party" surpassed "Honor of Kings" to become the first place on the iOS free game list a week after the year.
In this regard, a senior game planner told Tiger Sniff that "Egg Boy Party" has eaten through the vertical user circle, and its success is not impossible to replicate. "It has two innovations: first, the game lobby mini game covers most of the popular gameplay on the market, and the overall playability is vertically improved; Second, the zombie-like scheme encourages users to share and continuously enhance the social aspect of the game. Including "Egg Boy Party", which is currently not being updated, it is very popular with players. ”
Egg Boy Party" and "Against the Cold" mobile game in the last month (125-2.25) IOS** performance, dotted data.
In particular, the mobile game "Against the Cold" and "Egg Boy Party" have further strengthened NetEase's deterrence in the MMO and leisure and entertainment tracksThe number of registered players of the mobile game "Against the Cold" exceeded 50 million within 45 days of its launch, and in January 2023, the total number of active users of "Against the Cold" terminal + hand exceeded the 100 million mark, creating the first MMO "small payment per capita" business model, and the sales volume of 6 yuan fashion exceeded 100 million pieces in a single season; "Egg Boy Party" also topped the party track with more than 40 million DAU (daily active users, hundreds of millions of daily active users, hundreds of millions of registered users, and 100 million maps).
In addition, NetEase Games has business deployments in Guangzhou, Hangzhou, and Shanghai, and it has two larger data centers in Shanghai against Tencent Games - it is worth mentioning that NetEase Games had the earliest "stronghold" in Guangzhou, incubating popular games such as "Fantasy Journey to the West", "Journey to the West", "Onmyoji", "Harry Potter: Magic Awakening", "The Shore of the Land", and after infiltrating into Hangzhou, it has launched popular games such as "Against the Cold", "Naraka", "The Fifth Personality", "Egg Boy Party", and "The Day After Tomorrow" made in Shanghai. Diablo Immortal also performed well.
In the face of the above situation, Tencent naturally sees it in its eyes and is anxious in its heart.
Finally, on December 15, 2023, "Yuan Dream Star" will be launched, and the close hand-to-hand combat between Tencent and NetEase on the party track has also been amplified and scrutinized by the market - after all, "Yuan Dream Star" is intentionally or unintentionally targeting "Egg Boy Party" from the game category, launch time, and target audienceIt can be called a precise sniping attack by Tencent against NetEase.
On the day of the launch of "Yuan Dream Star", which was born with a golden spoon, not only WeChat and QQ spared no effort to set up the stage, but also Douyin, Kuaishou, Bilibili, Weibo, Xiaohongshu and other platforms all cheered, and won the first place on the App Store free list within two hours; In the first month of its launch (December 15, 2023 to January 15, 2024), the buying market, social platforms, game streamers, and games** almost all fell under the high-flying marketing offensive of "Metadream Star".
The first month of Yuanmeng's launch is an important node, and the amount of paving is like throwing stones to ask for directions, mainly depending on whether the market trend is still there, whether it is hot or not, and then the Spring Festival is the 'ring' of hand-to-hand combat in the real sense - such a national holiday, covering all ages, red envelope rain, ** should be more fierce, after all, Yuanmeng and Egg Boy are in the 00 post,It is also competing for the next generation of light social scenes, which is related to the boundary of the two other products. A game practitioner said to Tiger Sniff.
It stands to reason that the big DAU (daily active user) and light social characteristics of "Egg Boy Party" are exactly in line with Tencent's past game product path and traffic advantagesBut after the Spring Festival, the hottest winter holiday in game marketing, the gap between "Yuan Dream Star" and "Egg Boy Party" is quietly widening(The performance of Yuan Meng and Egg Boy in the past 40 days on the iOS side is shown in the figure above, and the in-depth analysis of the Tiger Sniff previously reported that "Tencent is kicked to the steel plate"). It is equivalent to saying that "Egg Boy Party" went all out in this party battle and finally withstood Tencent's first trend;But the price NetEase paid for this is that the marketing expenses in 2023Q4 will rise by 237% to 42300 million yuan, nearly 6 more than 2023Q3$500 million.
You must know that Ding Lei's most well-known label in the Internet circle is "slamming the door" - but this time Ding Lei said at the financial report meeting, "The increase in marketing expenses in the fourth quarter is mainly due to the factor of competition, which I think is normal;."During this year's Chinese New Year, the DAU of "Egg Boy Party" exceeded 40 million, which shows that the marketing expenses we spent have received a positive and positive effect. ”
In this regard, there is no shortage of game practitioners who believe that the core reason why Yuanmeng is struggling to chase eggs is that the action is too slow. ""Egg Boy Party" has been running for a year and a half, the core users have long been washed away, and friends have precipitated into a relationship chain, as long as "Yuan Dream Star" can't crush the performance of other products in terms of gameplay and graphics, it is difficult to pry egg boy players-To put it bluntly, Yuan Meng is a replacement, why should he surpass the egg boy?
In addition, NetEase's confidence in 2024 is also fully revealed in this financial report - NetEase's "Egg Boy Party", "Peak Speed", "All-Star Street Ball Party" and "Beyond the World" have successively seized the first place in the track of casual parties, MMOs, racing, and basketball, and blockbuster new products such as "Naraka: Bladepoint" mobile game (which has taken the version number and will be tested for the first time on April 1), "Condor Shooting" (scheduled to be launched on March 28), "Sixteen Voices of Yanyun" and other blockbuster new products are also expected to be launched in 2024This wave of new product potential energy may be able to bring NetEase to a higher position.
As Ding Lei said at the post-earnings meeting: "Based on the accumulation of NetEase Games over the past 20 years, 2024 will also be the year of harvest for NetEase Games." ”
I am Huang Qingchun, deputy head of the Tiger Sniff Business, Consumption and Mobile Group, focusing on entertainment and social networking, games, audio-visual and other fields, industry exchanges plus WeChat: 724051399, news clues can also be emailed to huangqingchun@huxiucom
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