NetEase, Inc. (NASDAQ:NTES) Q2 2023 Earnings Call Transcript

So going forward, we hope to continue to expand the user base for this game and hopefully become the dominant player in this category. Thank you. And — so the second question is on Internet. So this is actually our attempt on innovation in the anime-style game genre. So ACG game. This is our attempt to bringing the open-world experience and AI technology into the ACG genre. And so, this is our attempt to further solidify our development capabilities in AI and also give our ACG game lovers a true experience of open-world city lifestyle game experience. And hopefully, we’ll be able to do — will be able to introduce the game to our gamers in a not too far future. Thank you.

Margaret Shi: Thank you. Next, please.

Operator: Your next question comes from Ritchie Sun with HSBC. Please go ahead.

Ritchie Sun: [Foreign Language] Good evening, management. Thank you for taking my question. What’s the rationale behind the change of Naraka: Bladepoint to a free-to-play game? And how’s the reception in terms of in-game item sales and user base? And how would this change the game performance trajectory going forward? Thank you.

William Ding: [Foreign Language] Okay. So when office returned this game to a free — to free, we were able to bring in more users. So after this transition, we actually saw a great improvement in terms of both our active users and also our revenues. So we think that was the right decision to make. Thank you.

Margaret Shi: Thank you. Next question, please.

Operator: Your next question comes from Felix Liu with UBS. Please go ahead.

Felix Liu: [Foreign Language] Let me translate myself. On the domestic pipeline, congratulations on the [Badlanders] win on Where Winds Meet. We look forward to more color on the game in Gamescom. Can management share more color on the status — R&D status of the game? What are the potential launch time that we’re looking at? And what is the game’s differentiated marketing positioning comparable with Justice Mobile given both seems to be open-world and martial arts-based RPG game? Thank you.

William Ding: [Foreign Language] So Where Winds Meet is actually a very important game for us. It actually has a very different worldview to our Justice. So when we develop — when we were developing Where Winds Meet, we are actually learning about different things with open world experience and hopefully, we’ll be able to launch it by the second half next year.

Charles Yang: Second quarter.

William Ding: Second quarter next year. So for NetEase, we believe we have a lot of experience in open-world games. So — and then we — every game we launch, we try to bring our users to a different user experience. Thank you.

Operator: The next question comes from Lincoln Kong with Goldman Sachs. Please go ahead.

Lincoln Kong: [Foreign Language] So thank you management for taking my question. My question is about the new game title offer a NetEase. So in the past 12 months, we have seen a very successful launch of Eggy Party, Racing Master, and also recently the Dunk City Dynasty. Those are relatively less exposed game from NetEase in the past. So how should we conclude and understand the success experience — learning from these games? And after the breakthrough for all these different type, what company’s R&D development or operational strategy have any change or priorities in the future, especially for those leisure party, car racing or even like a shooting type of games.

William Ding: [Foreign Language] So as the — as the Internet company, as a content provider, we keep our innovations really at heart and we continue to invest very heavily in R&D. So the success you’ve seen in the past 12 months are some positive results from the past effort with fully in R&D and in developing game. But these are successive, but there have been failures too, but we will continue to work hard, never give up, and we want to bring our game users continues great game content through our innovation and dedication analogy. Thank you.