Challenges remain, opportunities remain
The four major portals represented by Sohu, NetEase, Tencent and Sina, as the first wave of witnesses and beneficiaries of the rise of the Internet in China, today’s fate has already changed dramatically. With the continuous update and iteration of the domestic Internet, the decline of portal websites as the source seems inevitable. In the transformation of the model, companies that started with portals are also seeking long-term development.
Nowadays, Tencent has a leading position in the social and gaming fields, Sina is relying on Weibo, Sohu sold Sogou, and NetEase is also relying on games, music, etc. to continue to expand into other fields, and the current market value has exceeded The HK$600 billion is no longer what it used to be. A few days ago, NetEase announced the financial data for the first quarter of 2020.
(Pictures are drawn from Canva)
Games still dominate the revenue
According to financial report data, NetEase’s revenue in the first quarter of 2021 reached 20.5 billion yuan, an increase of 20.2% year-on-year; net profit was 4.4 billion yuan, an increase of 25.0% year-on-year. Under non-GAAP, net profit attributable to the company’s shareholders For 5.1 billion yuan. This time, NetEase not only broke the 20 billion mark in terms of revenue, but also exceeded the expectations of the market and analysts.
Thanks to the financial data that exceeded expectations, NetEase’s performance in the capital market was greatly boosted. NetEase’s US stocks rose by more than 4.86% after the release of the financial report. From the perspective of business breakdown, NetEase’s performance in the game business in the first quarter was very impressive.
According to previous financial reports, games have always been NetEase’s most important business and one of its largest sources of revenue. In the first quarter of 2021, NetEase’s online game service net income was 15 billion yuan, an increase of 10.8% year-on-year, accounting for NetEase’s long-term empowerment and investment are also inseparable from NetEase’s long-term empowerment and investment.
First, optimize old games and develop new games. In the first quarter, the number of users and income of NetEase’s major classic mobile games remained stable. At the mobile game level, the mobile game “Fantasy Westward Journey” maintained a strong market performance. NetEase continued to work hard on the optimization and improvement of old games. So as to realize the long-term operation of classic products.
In addition, NetEase is constantly developing new games while stabilizing the old games. For example, new games such as the mobile game “Tianyu” and “Forget Chuan Fenghualu” have also achieved good results after being launched.The copyright party signed a copyright agreement; in the e-commerce business, Netease Yanxuan also used “Netease Wanjia” to sink and expand the market, and the diversified layout also brought a lot of influence on Netease.
First of all, the revenue structure is further optimized. The diversified business layout can not only improve the construction at the content level, but also promote the further optimization of NetEase’s revenue structure, and the overall health is becoming more and more. It also creates more space for NetEase’s future development, so as to provide better services. user.
Secondly, improve the ability to resist risks. The current Internet product update iterations are very fast, and the rise of new companies is also very fast. Pinduoduo and ByteDance are good examples. Therefore, established companies will not focus on a certain business. In addition to continuously optimizing their own systems and ensuring their core competitiveness, they must continue to bring new stories to the market.
The challenges remain, and the opportunities remain
On the surface, all of NetEase’s businesses are currently in a stable development state, and most of them involve outlets. But in fact, the status quo of NetEase is not easy. To meet future development, NetEase still needs to face many challenges.
First of all, competitors should not be underestimated. At present, NetEase’s main businesses are facing great competitive pressure. For example, Tencent in the game field has an absolute position, and there are many niche game developers blooming; in the field of e-commerce live broadcast, in addition to the old e-commerce platform to guide users’ minds, in recent years Short video live broadcasts are also extremely popular.
Furthermore, despite the exit of its competitor Xiami in the online music field, while its own advantages have been enlarged, the advantages of Tencent Music have also extended infinitely. Although the field of online education is an outlet, it is a bottomless pit that requires long-term investment, and it also adds a lot of uncertainty to the future development of NetEase. Therefore, NetEase must always ensure competitiveness in all fields.
Secondly, business costs are higher. According to the financial report, NetEase’s total operating expenses in the first quarter of 2021 were RMB 6.777.1 billion, accounting for one-third of total revenue. In the future, with NetEase’s long-term exploration in various businesses, its expenditure will also become higher and higher. For example, NetEase and Sony Music Entertainment recently reached a new copyright cooperation, which is a long-term content investment.
For NetEase, it has been on the Internet track for many years. Although there are few big news, it has never been far away from the center of the Internet. NetEase has been continuously consolidating its core competitiveness, and it has not entered into those seemingly high-profile, but the actual bubble is too big, but to move closer to the mass business.
Therefore, although NetEase faces great competition, the sense of security and certainty of its business is not low. In the future, this Internet veteran, who was established earlier than Ali and Tencent, will continue to bring “new things” to the market.