NetEase reported robust performance during Q3 2020, driven in part by its gaming division. According to the research data analyzed and published by Safe Betting Sites, its total revenue rose by 27.5% year-over-year (YoY) to $2.75 billion in the three-month period.
74% of this figure, equivalent to $2 billion, came from online games. The online gaming segment posted 20% growth during the quarter.
“Innovative businesses and others,” which is its second-largest business segment, raked in 21% of the total revenue or $574.4 million. The segment grew by 42% YoY, thanks to the robust performance of NetEase Cloud Music. Other units under this segment include its online advertising business and eCommerce marketplace.
Youdao, its online education platform, generated the remaining 5%, equivalent to $132.0 million. This segment has been thriving throughout the pandemic period. In Q3 2020, its revenue surged 159% YoY.
From the online games division, 73% of the net revenue came from mobile games, rising slightly quarter-over-quarter (QoQ). Based on data published by Ampere Analysis, the company’s revenue from online games has been on an uptrend for the trailing 12-month period.
In Q3 2019, the figure was $1.614 billion, increasing to $1.667 billion in Q4 2019. It rose further to $1.910 billion in Q1 2020 and hit $2.0 billion in Q2 and Q3 2020.
The figure increased by 100 million RMB (around $15 million) from Q2 to Q3 2020. However, due to currency fluctuations, it remained flat in USD.
NetEase’s Fantasy WW Journey Generates $48 Million in August 2020
In the Chinese market, some of NetEase’s top-performing mobile games included Sky, Onmyoji and Invincible. The company also continued in its overseas expansion with titles such as Knives Out, Identity V and LifeAfter.
Fantasy Westward Journey, released in 2001, was one of the top-grossing titles for PC gamers. Despite the fact the first product on the series was released 19 years ago, it remains as the company’s most profitable IP series.
According to Sensor Tower data, Fantasy Westward Journey (mobile version) was the sixth highest grossing game worldwide on the App Store during Q3 2020. Knives Out, released in 2017, sat in the seventh position.
Based on data published by Statista, Fantasy Westward Journey (mobile) generated $48.38 million in August 2020. Courtesy of this performance, it ranked fourth on the list of leading mobile game apps in China during that month.
Onmyoji, released in 2016, also made an appearance on this list, sitting in the tenth spot after generating $20.57 million in the same month.
It is worth noting that NetEase has not launched any new titles over the past two years that are comparable to these top performers.
Comparatively, its main rival Tencent launched the blockbuster title PUBG Mobile Peacekeeper Elite in 2019.
In August 2020, the highest grossing mobile game in China was Tencent’s Honor of Kings, earning about $154 million. It was also the top grossing mobile title in China during Q3 2020, both in terms of overall revenue and revenue on the Apple App Store.
Consumer spending on Honor of Kings shot up by 65% YoY during the period across the App Store and Google Play Store.
PUBG Mobile was second globally in overall revenue and on the App Store, with consumer spending surging by 28% YoY. Overall, Tencent’s Q3 2020 revenue from online gaming shot up 8% QoQ.
China’s Gaming Market Revenue Hits $10.4 Billion in Q3 2020
On the bright side, during the Q3 earnings call, NetEase announced the launch of several highly anticipated titles in China.
These include World of Warcraft: Shadowlands, which launched on November 24, 2020 in China. Currently in open beta, Harry Potter: Magic Awakened is awaiting government approval and will launch officially as soon as it gets approval.
Revelation Online, an MMO, is scheduled to be released prior to the Chinese New Year, on February 12, 2021. Other upcoming games include Pokemon Quest, The Lord of the Rings: Rise to War and Diablo: Immortal.
For China’s gaming market as a whole, NetEase’s revenue amounted to $10.4 billion during the quarter according to China Audio-Video and Digital Publishing Association.
Moreover, China’s total number of gamers rose to 661 million during the period, an increment of 3.6 million. Based on these figures, the world’s largest gaming market now has more gamers than the total population of the US, UK, Japan, France and Germany combined.
From NetEase’s total revenue, mobile games accounted for almost 75%, generating $7.77 billion. Tencent, which runs the largest social network in China and the largest video game business globally, has cemented its spot as the leading company in China’s gaming space. NetEase is ranked second.