On August 20, NetEase (NASDAQ:NTES) reported second-quarter results that leaned almost entirely on games the company launched years, not months, ago.
Total net revenue reached RMB 30.1 billion, up 7.9% year over year, and the games and related value-added services unit again did most of the pulling, climbing 9.7% to RMB 25 billion
The headline number was steady growth. The more interesting story was how much of that growth showed up in the profit line rather than just the top line. The Old Hits Are Still Grinding Online games revenue rose 10% year over year to RMB 24.5 billion, and NetEase credited the gain to franchises that have been around for a while rather than a single breakout hit.
Sword of Justice pulled in more than 10 million active players on the launch day of its New World anniversary update, pushing concurrent users to a two-year high after the introduction of a new region called Dali. Eggy Party crossed 700 million registered users while holding monthly actives above 100 million, and the game has paid out RMB 200 million in cumulative creator rewards, evidence that its user-generated content ecosystem is still functioning as a retention engine rather than a novelty. Gross margin in the games segment jumped to 76.1% from 70.2% a year earlier, driven by lower revenue-sharing costs, which explains why gross profit grew 17.5%, more than double the pace of revenue.