NetEase (NTES.NASDAQ, 09999. HK) has once again created a surprise.
On December 27th, the highly anticipated martial arts open world RPG game "Yan Yun Sixteen Sounds" finally submitted its final answer after half a year of "waiting", and the PC version was officially launched. As soon as the game was launched, it gained recognition from many players for its graphics presentation that was not inferior to other 3A games, highly flexible action interaction, clever restoration of the martial arts world, and unique innovation in the MMORPG category.
On the player community TapTap, the rating of "Yanyun Sixteen Sounds" is as high as 8.6 points, and in the past 7 days, positive reviews from players account for over 70%. According to the official Weibo account of "Yanyun Sixteen Sounds", millions of players flooded in on the first day of the game's public beta. As a game that currently only has a PC version and has not been launched on the Steam platform, it is not easy to achieve such results solely through official download channels. By the time the mobile app goes online during next year's Chinese New Year, the influence of 'Yanyun Sixteen Sounds' is expected to be further amplified.
The recognition of players cannot be separated from NetEase's insistence on quality and innovation. This veteran gaming giant, which advocates a strategy of high-quality products, not only keenly captures the trend of 3A and cross platform development in gaming, but also invests 5 years and hundreds of teams to make breakthroughs; I am also brave enough to proactively choose to postpone and spend more time and energy on adjusting and optimizing when the product is not yet perfect during in-game testing, in order to make up for the shortcomings in content.
And this persistence is also the fundamental reason why NetEase can always remain at the forefront of the industry. From the era of PC games such as "Journey to the West" and "Fantasy Westward Journey", to the era of mobile games such as "Onmyoji", "Egg Boy Party", and "Reverse Water Cold Mobile Game", and now spanning multiple PC games such as "Eternal Tribulation" and "Yanyun Sixteen Sounds", innovation has always been the main driving force behind NetEase's game development.
Take the lead in embarking on the path of domestic research and development
The connection between NetEase and gaming dates back to 2001, when NetEase, which had just gone public, spent $300000 to acquire Guangzhou Tianxia, which had previously launched the first open graphics MUD engine in China. Since then, in an era dominated by representing successful overseas products, NetEase has taken the lead in the development of domestic games.
However, breakthroughs are often not easy, and the immaturity of technology has hindered the performance of its first product, "Journey to the West Online," which received mediocre feedback after its launch.
But Ding Lei did not give up. Under his promotion, NetEase continued to streamline its planning and reorganize its technical path based on "Journey to the West Online". Six months later, it quickly launched "Journey to the West 2" with a better gaming experience, capturing market recognition and becoming popular for a while.
Later, in late 2003, "Fantasy Westward Journey" was launched with many innovations such as Q-version art style and full server league. Once it was launched, it quickly became a popular classic IP in Chinese gaming history, and its influence continues to this day. In 2005, "Fantasy Westward Journey" broke the record for the highest number of concurrent players, surpassing one million, becoming the second game in the world to achieve this feat.
NetEase is not satisfied with this. In order to continuously pursue better visual and gaming experiences, NetEase has been investing in self-developed engines since 2007, and has successively created two important self-developed engines, NeoX and Messiah, which provide important support for enriching the gameplay content of games.
And this also provided assistance for NetEase's rapid transformation after the arrival of the mobile game era. In 2015, the second-hand works of classic IPs "Fantasy Westward Journey" and "Journey to the West" were quickly launched, laying the foundation for NetEase's position in the mobile gaming market.
In 2016, NetEase took two years to create the "Yin and Yang Master", which was officially launched. This low cost anime game, which was not expected to be popular, quickly exploded with a refreshing style of fine painting and unique card drawing play, becoming the biggest dark horse in the game industry that year.
According to a research report by Guojin Securities, less than two months after the launch of "Onmyoji", MAU exceeded 10 million. In October, iOS single channel revenue reached 470 million, accounting for 34% of NetEase's monthly mobile game revenue. NetEase briefly surpassed Tencent in mobile game revenue with "Onmyoji" in October 2016, becoming the world's largest mobile game publisher at that time.
But more importantly, the development and iterative upgrading of self-developed engines have also helped NetEase build a mature game production pipeline. This old game giant has gradually become familiar with various gameplay of mobile games since then. As long as the theme is of high quality, it can achieve an average level or above in the final product. In the following years, NetEase successively created several perennial bestsellers such as "Leading the Land" and "The Fifth Personality".
Even today, these products still have a high level of influence in the market. According to the "China Evergreen Game List for January November 2024" previously released by Time Finance, a total of 30 games have entered the evergreen game camp. Among them, seven games under NetEase alone, including "Fantasy Westward Journey Mobile Game," "Identity V," "Leading the Land," "Onmyoji," and "Qiannu Ghost Mobile Game," have successfully made it onto the list, accounting for over 23%, significantly widening the gap between NetEase and other manufacturers.
In addition to self-developed engines, NetEase has also started to lay out AI in advance. As early as 2017, NetEase established the world's first artificial intelligence laboratory dedicated to gaming, accumulating mature technological strength and attempting to deeply integrate it with gaming. one side. NetEase has overcome the difficulty of long-term operation of casual party games by incubating the UGC ecosystem and utilizing AIGC capabilities, creating big DAU hits like "Egg Boy Party".
At the same time, NetEase cleverly integrated generative AI into the game, creating the innovative gameplay of "Reverse Water Cold Mobile Game" with intelligent NPCs, AI offline players, and self created AI friends in the martial arts world. As soon as the product was launched, it immediately ignited the MMO game market. In less than ten minutes of public testing, the number of online users exceeded one million. According to estimates from multiple institutions, the game's first month revenue exceeded 2 billion yuan.
After 1-2 years online, these two games still maintain strong vitality. Reverse Water Cold Mobile Game "and" Egg Boy Party "have estimated revenues of $241 million and $119 million respectively on the iOS platform, ranking first and third on the" China Potential Evergreen Game List for January November 2024 ".
3A quality online games advance towards the new generation
However, with the intensification of competition in the mobile gaming market and the continuous improvement of players' requirements for game graphics quality, the performance of mobile devices has become somewhat inadequate. At the same time, many players have also pursued higher levels of tactile feedback, frame rate, and smooth continuous gameplay in product operations.
Under various demands, the PC platform has naturally become a new focus of attention for many mobile game manufacturers and players. And the release of "Black Myth: Wukong" on August 20th this year, which is regarded as the first domestic 3A masterpiece, has led the industry to re-examine the value of domestic 3A with its unexpected commercial achievements.
On this basis, a group of domestic game manufacturers have gradually embarked on the "cross end era", striving to meet the expectations of players and the market with higher quality products. NetEase, which ranks at the top of the industry, is no exception. It has long been keenly aware of changes in market trends and has made preparations in advance.
The Sixteen Sounds of Yan Yun "is one of the important attempts. NetEase is attempting to take the lead in integrating 3A level single player experience into traditional online games in this open world martial arts themed game, and bridging the PC/Android/iOS three ends to achieve MMORPG style long-term operation and payment system.
This is a path of exploration that few people have taken. There have been no successful cases in the industry of making free games with 3A quality before, and NetEase has only crossed the river by feeling the stones little by little. Fortunately, 'Yanyun Sixteen Sounds' ultimately lived up to players' expectations. From the feedback received a few days before its launch, although the game was not perfect, it still impressed the market with its support for quality and innovation, and laid a good foundation for future long-term operations.
And NetEase has never stopped making such innovative attempts. Previously, NetEase integrated the ultimate Eastern aesthetics with a unique cold weapon melee experience to create the globally popular martial arts chicken eating competitive PC game 'Eternal Tribulation'. In June 2022, the product's official sales exceeded 10 million copies, becoming the first domestically produced buyout game to achieve this milestone. To further amplify its influence, a year later, "Eternal Tribulation" announced a shift towards free operation, and to date, it has over 40 million players.
In 2024, NetEase will continue to work hard and move the product to the mobile end, creating a mobile game called "Eternal Tribulation" that is compatible with the PC version in terms of activity and appearance, and becoming the best-selling product of the year. After the game was released for pre download, it topped the App Store's free list in China. On the day of its public beta, it rose to the top 3 of the iOS China game bestseller list and then topped the TapTap new product list. Its first month revenue is estimated to have exceeded 900 million.
The management of NetEase emphasized during the 2024 Q2 earnings conference call that as a new operating category on the mobile platform, the performance of the mobile game "Eternal Tribulation" exceeded expectations. Currently, according to statistics, 70% of players have never played the PC game "Eternal Tribulation", and nearly half of the players are new users of NetEase
In 2025, NetEase's anime open world masterpiece Infinite is expected to be tested at the beginning of the year. Hu Zhipeng, head of NetEase's Thunder Business Group, made a prospect at the third quarter financial report meeting, saying that the company has invested a lot of R&D resources in this product and has high expectations.
"What we can assure you is that Infinity not only continues the tradition of the anime open world, but also incorporates a lot of innovation. These attempts are based on NetEase's understanding of the game market and observation of players over the past 20 years, and we are confident in this game," said Hu Zhipeng.
Over the past two decades, mainstream platforms in the gaming market have migrated multiple times, and players' tastes have also been constantly changing, placing higher demands on content producers. Therefore, only a very small number of game developers can always stick to the front line of the table, and NetEase is one of them. Although it does not have endless resources and strong social advantages as support, it can still continuously find unexpected bestsellers through its persistence in high-quality content and innovation.