Author |Huang Yu.
Edit |Zhou Zhiyu.
muffled to make a fortune". This is the most significant label given to Ding Lei, the founder and CEO of NetEase, by the outside world last year.
Thanks to the outstanding performance of the mobile games "Egg Boy Party" and "Against the Cold", NetEase's stock price has bucked the trend in the past year**, and at the end of last year, it quietly surpassed Meituan to become the fourth largest Internet company in China by market capitalization. Ding Lei's value has also risen sharply because of this.
However, Ding Lei, who has been in a fat year, is difficult to say easy next. After Tencent's "Dream Star" was launched in December last year, it launched a fierce attack on "Egg Boy Party", and Ding Lei also had to fight with all his might.
In order to stop Tencent, Ding Lei "hemorrhaged". This is intuitively reflected in NetEase's financial report for the fourth quarter of 2023 announced on February 29.
According to the financial report, in the fourth quarter of last year, NetEase's sales and marketing expenses were 42300 million yuan, an increase of about 6 percent over the previous quarter600 million yuan, about 8 million higher than the same period last year100 million yuan, an increase of about 18 percent month-on-month and year-on-year respectively5% and 24%; At the same time, the ratio of selling and marketing expenses to revenue in the fourth quarter was 156%, both month-on-month and year-on-year increased by 2 percentage points.
Ding Lei said frankly that the increase in marketing expenses in the fourth quarter was mainly due to competitive factors. In the face of the competitive pressure brought about by "Dream Star", NetEase has continued to invest heavily in the past few months to promote "Egg Boy Party".
Judging from the results, Ding Lei feels that the hundreds of millions of marketing expenses spent are worth it. He said, "I think this is normal, and the number of daily active users of Egg Boy Party exceeded 40 million during the Spring Festival this year, which shows that the marketing expenses we spent have received a positive and positive effect." ”
However, the market is worried about the sharp increase in NetEase's marketing expenses, resulting in lower than expected revenue and profit in the fourth quarter, and believes that NetEase may continue to increase related investment in order to cope with competition from Tencent, which will affect its financial performance. So much so that NetEase, which has performed well in the past two years, fell 3 percent in U.S. stocks after the earnings report88%。
The battle between "Egg Boy Party" and "Dream Star" is a battle that NetEase cannot lose at the moment.
As a popular party game in 2023, "Egg Boy Party" has become NetEase's highest-ever DAU game, seizing the post-00s game social scene. NetEase's financial report data shows that the cumulative number of registered users has reached 500 million since its launch in 2022.
Egg Boy Party is not only a major breakthrough for NetEase in the gaming business, but also a pillar game for NetEase today, which NetEase hopes to prove its strength in social gaming and UGC. According to the financial report data, mobile games are currently the main revenue of NetEase's **game business**, and the net income accounts for 75% of the **business2%, a year-on-year increase of about 82 percentage points, the growth is mainly from mobile games such as "Egg Boy Party".
Today, "Egg Boy Party" is undoubtedly the most concerned project in NetEase's financial report.
In the face of investors' concern about whether "Egg Boy Party" will go overseas, Ding Lei said that "Egg Boy Party" has achieved great success in China, and NetEase is also very active in exploring overseas markets, in the process of gradually verifying some ideas.
Compared with Ma Huateng, who said that Tencent Games had "made no achievements" in the past year, Ding Lei was very satisfied with NetEase Games.
He mentioned at the earnings conference that 2023 is a milestone year for NetEase Games in terms of category innovation breakthroughs. "I believe that 2024 will also be a year of harvest. The lessons we've learned over the past 20 years will yield even greater results this year and beyond. ”
In addition to the popular games that have been launched, a number of NetEase Games' self-developed masterpieces have obtained version numbers, which are highly anticipated by the industry and players. The mobile game "Naraka: Bladepoint" got the version number on February 27, and "Condor Shooting" started public beta on March 28.
Morgan Stanley analysts believe that NetEase's new product cycle in 2024 will have a positive effect on finance and stock prices.
Of course, Ding Lei's money is also chosen to be spent on the blade, and while the game is "bleeding", the overall theme of NetEase is still to reduce costs and increase efficiency. According to the financial report, in the fourth quarter of last year, NetEase's operating costs were about 103200 million yuan, basically flat month-on-month, down 148%。
In this context, last year, NetEase's revenue exceeded the 100 billion mark for the first time, up 7% year-on-year2% to 1034$6.8 billion; Net profit attributable to shareholders of NetEase was 2941.7 billion yuan, a year-on-year increase of 446%。
For NetEase, how to create diversified income** while stabilizing the game's basic market is still a big challenge.
Today, although NetEase has four major sectors: games, Youdao, NetEase Cloud, and innovation and other businesses, games are still the pillars. Last year, NetEase Games' revenue was about 81.6 billion yuan, accounting for about 79% of the total revenue.
In terms of other businesses, NetEase Cloud** further strengthened the commercialization of members, with a revenue of 7.9 billion yuan last year, achieving an annual turnaround for the first time; NetEase Youdao released the "Zi Yue" education model 20, driving the annual revenue to increase to 5.4 billion yuan; The annual revenue of innovation and other businesses was 8.6 billion yuan.
In 2023, NetEase will usher in a turnaround with the mobile games "Egg Boy Party" and "Against the Cold"; In 2024, the competition in the game industry will intensify and the AI wave will rise, and it is still unknown whether NetEase can continue to continue the aura of 2023. Ding Lei said that NetEase attaches great importance to the application of AIGC in games, ** and other scenarios, and will be ready to participate in this round of AI development.
The situation is changing rapidly, and Ding Lei still can't sit back and relax.