Facing Strict Regulation, NetEase’s Game Revenue Growth Falls to Single Digits

NetEase released its financial report for the second quarter of 2021 on Tuesday. Under the background of tighter supervision, the growth rate of NetEase‘s game revenue dropped to single digits.

NetEase‘s revenue during the period was contributed to by three sectors, of which online game revenue was 14.5 billion yuan ($2.2 billion), a year-on-year increase of 5.1% and accounting for 70.8% of total game revenue. Youdao’s revenue reached 1.3 billion yuan, up 107.5% year-on-year, while innovative business and other revenues reached 4.7 billion yuan, up 26% year-on-year.

Regarding the revenue of online games, Ding Lei, CEO of NetEase, said: “Our existing game products maintained steady growth on the high benchmark last year, and we are excited about the new products. Among the games to be launched in the second half of the year, ‘NARAKA: BLADEPOINT,’ attracted the attention of players all over the world. ‘Harry Potter: Magic Awakened’ has been confirmed to be launched on September 9th.”

On August 30, the National Press and Publication Administration cut the amount of time players under the age of 18 can spend playing online games. Honor of Kings, an online game produced by Tencent, announced an upgrade to its anti-addiction measures according to the notice. On the conference call for NetEase‘s second-quarter report, Ding said, “as a major game developer in China, we will strictly implement the new regulation and all markets for minor players will be abandoned.”

SEE ALSO: Tencent Limits How Many Hours Minors Can Play Honor of Kings Per Week

NetEase also said that less than 1% of its revenue comes from minors. Tencent‘s Q2 financial report disclosed that 2.6% of its revenue comes from players under 16 years old, among which 0.3% is from players under 12 years old.

NetEase‘s revenue in the second quarter was 20.5 billion yuan, up 12.9% year-on-year, and its non-GAAP net profit was 4.2 billion yuan, down 19.2% year-on-year. At the same time, the firm’s operating profit was 3.758 billion yuan, and its operating profit rate was 18%. Compared with that in the second quarter of 2020, the above two numbers also declined.