NetEase has announced that it generated 24 billion yuan ($3.3 billion) in the second quarter of 2023, marking a 3.7% increase compared to the same period in 2022. The company’s latest financial report reveals that games and related services were the most profitable sector, contributing 18.8 billion yuan ($2.6 billion) in revenue, representing a 3.6% year-on-year increase.
Despite the regulatory changes affecting the gaming industry in China, NetEase has maintained stability. Net revenues from online gaming accounted for 91.7% of the gaming revenue, slightly lower than the previous quarter and the same period in 2022. This demonstrates NetEase’s ability to navigate the regulatory landscape and adapt to the changing environment.
Mobile gaming continues to be the primary source of revenue for NetEase’s gaming segment, generating approximately 73.6% of online gaming revenue in Q2 2023. This is an increase from 72.3% in the previous quarter and 66.1% in Q2 2022, highlighting the continued growth and importance of mobile gaming for the company.
While revenue has increased, gross profit for the quarter stood at 14,375.4 million yuan ($1,982.5 million), compared to 14,895.5 million ($2,045.5 million) in the previous quarter and 12,941.5 million yuan ($1,777.1 million) in Q2 2022. This indicates some turbulence in the company’s profitability, which will need to be addressed moving forward.
The company attributes its financial performance in Q2 2023 to several new game releases. In June, NetEase launched three mobile games that achieved strong chart performance in China. “Justice” topped China’s iOS grossing and download charts, while “Racing Master” ranked third in iOS grossing games and “Badlanders” peaked at number 2 on the iOS most downloaded chart. Additionally, the international release of “Harry Potter: Magic Awakened” also contributed to the company’s success, generating $2.3 million within the first week of its global launch.
Director and CEO William Ding expressed his satisfaction with the company’s second quarter results, stating, “Our steady second quarter results reflect our dedication to producing exceptional content across our businesses, which generated total net revenues of RMB24.0 billion, up nearly 4% year-over-year. Players continue to revere our flagship Fantasy Westward Journey series, while embracing newer titles like Eggy Party that extend our reach in casual games. The June releases of widely acclaimed Justice mobile game and Racing Master further showcase our endless drive to bring players innovative, first-rate games in diversified genres. We believe that each addition to our game portfolio validates our exceptional R&D capabilities and the broad influence our ingenuity has in the marketplace, including expanding the casual game market and altering the face of traditional MMOs.”
NetEase has also been listed as one of the top 50 mobile game makers of 2023.