On November 16th, NetEase submitted its "transcript" for the third quarter of 2023.
According to the financial report, NetEase's net income in the third quarter was 27.3 billion yuan; Under non GAAP, the net profit from continuing operations attributable to the company's shareholders is 8.6 billion yuan.
Behind the steady growth of numbers, it is inseparable from the "strong assistance" of NetEase's gaming business. In the third quarter of 2023, NetEase Games actively promoted business model and gameplay innovation, with a net revenue of 21.8 billion yuan in the gaming sector. In addition to benefiting from classic games such as "Fantasy Westward Journey" and "Da Hua Westward Journey", the "new backbone" represented by "Egg Boy Party" is indispensable.
At the end of last year, NetEase's "Egg Party" suddenly became popular, taking the lead in grabbing the attention of young players and quickly creating a "party gaming style" in the gaming market. Public data shows that the DAU of the game once exceeded 30 million, becoming the highest daily activity game in NetEase's history. In the August Top 30 popular game download list of Qimai Data, this game ranks first.
To some extent, 'Egg Party' has created a new growth story in the mobile gaming industry. In just one year, behind the growth of "Egg Party" from a casual game rookie to a national IP, it is not only the success of NetEase's bet on the new track, but also the change and innovation of NetEase's "gameplay" in the increasingly fierce gaming market.
Explosive Fire is not the Road to Overcoming the Challenge of "Egg Boy" in One Action
In the era of mobile gaming where big DAU products are almost monopolized, "Egg Party" unexpectedly opened a gap. In August of this year, the official announcement of "Egg Party" reached a milestone of double billion, with monthly active users exceeding 100 million and the number of UGC maps created by users exceeding 100 million.
Behind the achievement of 100 million months of living, the popularity of "Egg Boy" was not achieved overnight. Along the way, from deciding to choose "Party Game" as the core gameplay form, to combining trendy gameplay style with "spherical" characters, and later to a year and a half of research and development, as well as exploring and experimenting with the game's UGC ecology, "Egg Party" has been "crossing the river by feeling the stones".
In May 2022, after the game was launched, although it quickly caught the attention of players and made it to the top of the iOS free list and the best-selling list Top50, it was far from reaching its current popularity. Fortunately, 'Egg Party' did not stop, and the production team continued their journey through continuous optimization and updates of the game's gameplay and UGC ecology.
In order to make players feel the enormous potential and rich fun of UGC content gameplay, "Egg Boy Party" enriches the content components of the editor on a weekly basis, and based on NetEase's own AI technology, has successively launched AI generation functions such as one click map color changing and video generation actions, further reducing the threshold for game map creation, thus creating an easy to use and high degree of freedom "Egg Boy" UGC ecosystem.
At the same time, around the operation of the UGC ecosystem, the official has launched various map building competitions for large, medium, and small sizes, low threshold incentive plans, and signing plans for high-quality creators. Players can not only create while playing, but also earn profits while playing the game. Many map creators can earn over 10000 yuan in monthly income.
With the support of a series of combination fists, more and more players are consciously and spontaneously creating map content. Finally, with the help of UGC maps and second creation videos, "Egg Party" gradually gained scale effect and became the strongest "dark horse" in the gaming industry in 2022.
If the positive cycle of UGC ecology has raised the upper limit of "Egg Boy Party", the IP operation strategy based on Generation Z culture will help "Egg Boy" move closer to national IP. The massive player base, lively and cute native image of Egg Boy, and rich landing scenes of game content make "Egg Boy" a linkage target pursued by major brands. Since its launch, "Egg Boy" has conducted over 40 brand collaborations with various well-known IPs such as Flying DongDong, Honey Snow Ice City, Red Xiaodou, Fifth Personality, Chinese Qitan, and Happy Sheep. These IPs, which are deeply loved by Generation Z, have also helped "Egg Boy" further establish emotional connections with players, allowing them to achieve "pay for love".
On November 10th, "Egg Boy Party" once again announced its heavyweight plan - "Egg Boy Linkage Family Plan". In this plan, major IPs spanning multiple fields such as "Light Encounter", KFC, Sanrio Family, and China Post will also land on "Egg Island", making the IP appeal of "Everything can be Egg" deeply rooted in people's hearts once again.
Successfully Created Template for "Egg Party": NetEase Games Turning to Big DAU Products
The success of "Egg Party" undoubtedly opened up a new path for NetEase, which is eager for big DAU games and breaks through its own ceiling. NetEase CEO Ding Lei has also expressed that "Egg Party" needs to be done for at least another decade to become the next dream Western Journey.
Perhaps inspired by the high-quality content, strong social attributes, and low payment model of "Egg Party", the "gameplay" of multiple new and old products of NetEase Games this year is quietly changing.
Taking "All Star Street Ball Party" as an example, as early as the game was launched, NetEase claimed that the game would not be launched through the Android channel and would also share the 1.5 billion yuan in profits with players, which sparked a heated market discussion. In October of this year, the game even topped the best-selling list on the App Store.
Behind this, it is naturally inseparable from the transformation of patterns. Faced with the limited market, "All Star Streetball Party" attempts to innovatively integrate NBA IP with streetball gameplay, and abandons the traditional approach of sports and competitive games that rely on big R payments to make profits. Instead of being "heavyweight", "every player can experience enough stars for just a little money".
The mobile game "Cold Against the Current" launched at the end of June launched its first "price war in the gaming industry", completely selling no value and adopting a seasonal mode, attempting to transform MMORPG's high ARPU charging mode into a large DAU mode, changing the player ecosystem. According to relevant data, within 45 days of the launch of the mobile game "Cold Against the Current", the number of players exceeded 50 million, and the sales of the "Six Yuan Game Skin" exceeded 100 million units.
During the third quarter financial report conference call, NetEase executives stated that about one-third of the players of the mobile game 'Cold Against the Current' have not played NetEase games before. The mobile game 'Cold Against the Current' adopts a more user-friendly and relatively low ARPU small payment model, hoping to reduce players' payment pressure and ensure the long-term and healthy operation of the game.
In addition to new games, NetEase has also made significant adjustments to many classic and old games, with "reducing liver and krypton", not selling numerical values, season based, and advocating for player content co creation becoming NetEase's "new signboards".
In January of this year, NetEase's classic end game "Tianyu" officially launched the point card version, removing all complex paid numerical content and adopting a seasonal system; The re launched version of 'Super Exciting Dreamland' announced that it will not sell numerical items (including items or gift packages that enhance attributes such as enhancement and appraisal) at all, nor will it sell point cards at a time charge; The 2.0 version of 'One Dream Jianghu' will also focus on a 'season based' approach, breaking away from the original fixed experience and proposing a new gameplay of 'system integration, liver reduction, Krypton reduction, and welfare improvement'.
Under various changes, NetEase Games is attempting to build a new player ecosystem, allowing more players to experience NetEase games at a low threshold and be willing to stay for high-quality content and a good gaming environment for a long time.
The Wind in the Game Market is quietly Changing Behind the Transformation of NetEase Games
Looking at the gaming market, whether it's the continuous rise of 'Egg Party' or the stunning success of other popular models, no matter how complex the business model and format may be, the most fundamental challenge for the content industry is to make users always like your product.
At present, Generation Z is becoming the "main force" in the development of the gaming industry. The research results of CITIC Securities show that by 2025, the Z-generation group mobile game market will exceed 200 billion yuan, and the game market with Z-generation as the core will exceed the traditional game market.
Under the huge market potential, Generation Z has begun to lead the trend changes in the gaming industry. Unlike the post-80s and post-90s who focused on gaming in the past, for those who have lived in the internet age since childhood, games that are more diverse and three-dimensional, carrying "social demands" and meeting spiritual pursuits, are more favored by them.
According to Newzoo research, unlocking exclusive content is the primary reason Generation Z purchases games, followed by personalized characters or items. They tend to pay for rich gaming experiences, and their love for purely numerical games tends to be relatively flat.
Under this trend, mobile games such as "Egg Party" and "Cold Against the Water" were born, endowing games with more "new value" through trendy, socialized, and emotional approaches. Games are no longer just a game, but also a platform for players to express themselves, participate in social activities, and realize personal value.
In the past 20 years, several strategic adjustments of NetEase Games have been based on a keen insight into the shift in user needs. Whether it was the urgent demand for domestically produced original games from users who joined the self-developed games in 2001 or the comprehensive entry into the mobile game market in 2015, behind these proactive changes, focusing on users and exploring user value to a greater extent has always been the "winning weapon" of NetEase games.
This time, NetEase once again won the "ticket" to the next game competition.
(The content of this chapter is for reference only and does not constitute investment advice. Investors will operate accordingly and bear the risk themselves.)