90 games were launched and 41 games that benefited Netease's share price were developed, with an increase of more than 200% in three years

According to foreign media reports, Netease is focusing on launching one game after another, and there are reasons for doing so. In the past three years, Netease's share price has risen by more than 200%.

Original title Netease's share price rises 200% in three years: Game business benefits from the growth of mobile users in China

According to foreign media reports, Netease is focusing on launching one game after another, and there are reasons for doing so. In the past three years, Netease's share price has risen by more than 200%. The following is a summary of the foreign media article:

Henry Guo, an analyst at securities research firm M Science, pointed out that except for popular games, the life cycle of most mobile games is not too long, and the popularity usually only lasts for 3 to 6 months.

He said that as a game developer, a large part of Netease's success depends on how the company will continue to launch popular and successful mobile games in the future. In this regard, Netease has a good resume.

Netease's success has expanded from China to Wall Street, and Netease's share price has maintained an upward trend in the past few years. In the past three years, Netease's share price has risen by more than 200%.

Henry Guo said: "Our data and analysis show that Netease's mobile games are still stable, while mobile games have a strong momentum of development. They have successfully ported several end-games to mobile and have received good acceptance. The market also seems to like Netease stocks."

China has the world's largest game market and has a lot of room for development. This means that Netease still has good opportunities. The total number of Internet users in China exceeds 688 million, but this only accounts for half of China's total population. 90% of all netizens use mobile phones. Therefore, Netease is investing heavily in the development of mobile games.

Of the 90 games, 41 are under development.

Netease was founded in 1997. For a long time in the company's history, Netease has operated popular end games. Currently, Netease's product line includes more than 90 mobile games, while another 41 are under development. This will ensure Netease's status, and investors can use Netease to participate in China's fast-growing mobile culture.

Netease has three core businesses: PC and mobile games, advertising services, and e-commerce. Among them, the game business brings in most of the revenue. Netease also operates 163.com, one of the most popular portals in China, providing a popular streaming music service and one of the largest email services in China.

In January 2015, Netease announced the launch of Koala, a cross-border e-commerce platform, focusing on selling goods from abroad. Koala's competitors include Alibaba and Jingdong.

NetEase Chief Financial Officer Andrew Tsai said that Koala is maintaining healthy growth and profit margins are improving. Compared with Alibaba and Jingdong, Kola is achieving economies of scale. Goldman Sachs predicted in a research report that by 2017, Koala's revenue will reach US$2.2 billion.

However, the core of Netease's business is still games. Risks facing the business include weak performance of current core and new games, intensifying market competition, declining profit margins, and execution problems.

Competition with Tencent

In the game market, Netease's main competitor is Tencent. In terms of revenue, Tencent is the largest game company in China. Tencent also has a popular news platform WeChat and social media services, which can be used to promote games. In China's online game market, Netease is considered to be Tencent's only real competitor.

NetEase offers some of the most popular online games in China, including World of Warcraft, which is licensed by Blizzard.

Since 2009, Netease has obtained exclusive licenses for World of Warcraft and other games. At the end of May this year, Netease introduced Activision Blizzard's new film "Overwatch Pioneer" to the China market.

Lisa, research analyst at Niko Partners. "Netease has long run excellent works, has good technology, and has a good reputation among developers and players," said Lisa Hanson, director of the company. Niko Partners estimates that total revenue from the online game market in China reached US$15 billion in 2015 and is expected to reach US$20.4 billion by 2020.

NetEase is studying promoting its most popular works to English-speaking users. Netease established its first U.S. office in the San Francisco Bay Area in February 2015. Here, the R & D team develops mobile games for the European and American markets. Netease said that the U.S. office's strategy is to bring popular games in the China market and redevelop them to users in the United States and other countries.

Hansen said that China companies have achieved some success in the past through acquisitions and game exports.

In addition to authorized cooperation with Activision Blizzard and other game developers, Netease has also independently developed a number of games, most of which are multiplayer online games. Relatively speaking, Tencent's games mainly come from authorization.

Henry Guo said: "Netease has a strong professionalism in independent development."

New games have received acclaim.

More than three-quarters of Netease's revenue comes from multiplayer online games, such as the "Journey to the West" series. Multiplayer online games are more suitable for PC, but as users gradually turn to mobile, the overall PC game market is weakening. Therefore, Netease is investing heavily to diversify its game product line and attract a wider range of users.

In the first quarter of this year, mobile games remained Netease's main growth driver. Netease's classics remain ahead, but new games have also gained acceptance from players.

In the past two quarters,"Westward Journey" and "Fantasy Westward Journey" mobile games have been among the two most popular games on the Apple App Store in China. New games such as "Kung Fu Panda 3" and "The X-World" were launched in January this year and have received good reviews.

In local currency, Netease's first-quarter revenue increased 116% year-on-year to US$1.2 billion. Among them, online games revenue increased by 104% year-on-year to US$933 million, and advertising services revenue increased by 32% year-on-year to US$61 million. Other businesses, including mailbox and e-commerce, saw revenue increase 258% year-on-year to US$234 million.

In the first quarter, Netease's profit per ADS share increased 79% year-on-year to US$3.12. As of the end of the first quarter, Netease's cash and short-term investments reached US$4.4 billion.

Netease announced its first-quarter earnings report on May 11. At that time, Tsai Anhuo said that many of Netease's businesses showed strong growth.

Editor: Nancy