On February 29, NetEase released its full-year and fourth-quarter results for 2023, with overall revenue and profit growth.。

According to the financial report, for the full year 2023, NetEase had a solid performance, with total revenue of 103.5 billion yuan (RMB, the same below), up 7% year-on-year, breaking the 100 billion yuan mark for the first time; under non-GAAP (Non-GAAP), net profit attributable to the parent company was 32.6 billion yuan, up about 43% year-on-year.。During the quarter, NetEase's total revenue was 27.1 billion yuan, up 7.0%, flat month-on-month; gross profit of $16.8 billion, up 27.0%, essentially unchanged from the third quarter; Non-GAAP net profit climbed 54% to $7.4 billion。Although the overall growth trend, but all parts of the data is generally inferior to market expectations。

In terms of operating costs, operating expenses increased to $35.4 billion in 2023 compared to the previous year, while Q4 increased 13% year-on-year to $10 billion, due to an increase in investment in research and development and marketing expenses for games and related value-added services during the year.。

NetEase CEO Ding Lei said the company's performance in 2023 will grow healthily and many business segments will develop well.。"NetEase will continue to provide innovative, high-quality products and services, continue to output high-quality content, enhance the user experience, accelerate the integration of cross-industry digital innovation, and promote industry progress with practical applications."。"He said。

Steady UGC game wave tip egg party to make great contributions

Over the past year, NetEase has achieved multifaceted breakthroughs in many of its core businesses, with remarkable performance across the board.。

The online gaming business has always been the mainstay of NetEase's revenue and is also the largest division within the company.。In the fourth quarter, net income from games and related value-added services was $20.9 billion, up 9.6 percentage points, but with little effect from the previous quarter, up only 2%, less than market expectations.。

Since 2023, NetEase has achieved a milestone category breakthrough by virtue of AI self-developed technology landing, gameplay and content innovation, and won the first place in five major game tracks, including casual parties, MMO, racing, basketball and B-girls, accumulating new momentum for long-term development.。

It is understood that NetEase's own R & D team focuses on the development of hand games, end games and console games, and the team size ranks first in the industry.。Last year, NetEase's gaming revenue was $81.6 billion, of which online gaming accounted for about 92 percent of net revenue..9%, while net revenue from hand games accounts for about 75% of net revenue from online games..2%。NetEase also said that the company's profit growth was mainly due to revenue generation from explosive games such as "Egg Party" and "Cold Against the Water."。

Since its launch in 2022, "Egg Party" has registered more than 500 million players, DAU (daily active users) more than 40 million, as many as 100 million game maps, ranking first in party games, but also with Tencent "Yuanmeng Star" opened the confrontation.。During the Spring Festival, the game also connected to the CCTV network Spring Festival Gala, Henan Spring Festival Gala and other three Spring Festival Gala stage once again to boost its popularity。

In addition, the continuous upgrade of "Egg Party" is equipped with the UGC (User Original Content) creation tool of AI algorithm, and introduces new functions such as "egg code" and "universal generator," which greatly reduces the threshold of map creation, increases the upper limit of creation, and also improves the attributes of paradise edutainment.。At present, the number of UGC creators of "Egg Party" has exceeded 26 million, bringing the total number of maps to over 100 million, with the highest number of visits per map exceeding 1.200 million times。

However, Ding Lei has always been modest about the development of NetEase's UGC ecology and has put forward an optimistic attitude of exploring overseas markets.。He believes that gamers around the world have the same requirements for fun, and overseas markets can also learn from the successful experience of "Egg Party" and actively put it into practice.。

During the earnings call, Ding also responded to matters related to the new studio in Los Angeles.。He talked about the talent gathering in Europe, America, Japan and South Korea, the establishment of new studios is the only way, and the trend of increasingly critical players around the world is forcing game developers to improve the quality of their games.。"NetEase has accumulated and invested heavily in high-quality games over the past 20 years and will have even greater results after 2024.。"

In terms of social responsibility, NetEase Games also responded positively to the "Regulations on the Protection of Minors' Network" implemented at the beginning of the year, providing access to the "Minor Model" for all products on the basis of the anti-addiction system, and the first batch of 63 products in the industry has been deployed.。

The whole line ushered in a good color head cloud music for the first time to turn losses into profits

In addition to the game business, NetEase has also achieved good results in other sectors.。

Thanks to the continuous optimization of member subscription revenue, operational efficiency and cost control, NetEase Cloud Music achieved its first annual turnaround in 2023, with gross margin up from 14% in 2022..4% to 26 in 2023.7%。According to the financial report, NetEase Cloud Music's online music service revenue reached 43% in 2023..500 million yuan, up 17.6%; social entertainment services and other income of 35.200 million yuan, the number of monthly paid users of social entertainment services increased to 1.6 million, an increase of 20.3%。

Online music service DAU up 8.7% to 2.06 million people, including 44.12 million monthly paying users, up 1.5.3%, payment rate of 21.4%。And thanks to the expansion of membership, the business's membership revenue continued to grow, with full-year revenue of 36.500 million yuan, an increase of 20.2%, and online music services increased their monthly revenue per paying user to 6.9 yuan。

Good platform operation is also inseparable from the continuous expansion of content categories and the continuous output of high-quality content.。NetEase Cloud Music has made great efforts in the traditional advantageous music categories, focusing on the advantageous categories such as rap and regional music, and mining the upstream of the music industry chain, attracting a large number of professional original musicians and music lovers to settle in, improving the activity of circle users.。

Data records, 2023, NetEase cloud music platform homemade songs "Jing Wei," "to the cloud" and other out of the circle.。By the end of the year, the number of music tracks in the content library had reached 1.4.9 billion, about 68 original musicians on the platform.40,000 people have written about 3.1 million songs.。

In 2024, NetEase Cloud Music will further focus on platform scale growth, steadily enhance platform profitability, and promote the healthy development of cloud village ecology.。

Plus codeTechnology self-research force pushAIGC Globalization

Ding Lei said at the earnings conference: "What AI can do today is even more significant than in the past decade.。From ChatGPT to the recently hotly debated Sora, global AI technology has advanced by leaps and bounds in the past year, and this wave of AI technology will greatly improve the quality of the median content.。

In 2023, NetEase insisted on self-research of key technologies such as AI, accelerated the application of technology to achieve business breakthroughs, and invested 16.5 billion yuan in research and development.。At present, AI models and other self-developed technologies have been fully penetrated into the core business of empowerment, in digital content and industrial manufacturing and other fields of rapid landing, Youdao online marketing services for five consecutive quarters up more than 50% year-on-year, the fourth quarter revenue increased 97% year-on-year record high.。

During the year, NetEase Youdao released the "sub-day" education model 2..0, Launches Virtual Human Speaking Coach Hi Echo 2.0, AI tutor small P teacher and other large model native applications, in the field of education and advertising landing effect exceeded expectations, driving the annual revenue of 5.4 billion yuan, but by the decline in intelligent hardware and online marketing growth, learning services revenue decreased slightly。

At the same time, NetEase Cloud Music deepens the full-chain application of AI technology, and self-developed one-stop AI music creation tool can generate song demo in 10 seconds based on 3 keywords.。Most importantly, the upgrade of algorithm recommendations is becoming a key factor in the turnaround of the cloud music business。In the game field, "Against the Cold" mobile game as the first large-scale application of AI gameplay of the mainstream game, to create a thousand people of intelligent NPC, and the first AI game virtual newspaper system "Big Song Headline"。

From a macro point of view, NetEase's technology application is not limited to content scenarios, but also serves the landing of physical industries such as industrial manufacturing and national exhibitions.。In the first half of this year, NetEase Fuxi will also launch a remote control platform for construction machinery based on 3D digital twin technology to create a safer and more efficient operating environment for physical scenes such as mines and ports.。