on August 14, netease announced today that the company as of June 30, 2014 in the second quarter unaudited financial results. Results showed that netease period net profit of $193.8 million, up 9%; Revenue was $475.8 million, up 22.3% from a year earlier.
after the earnings release, netease CEO ding and CFO Cai An live attended the earnings call, then a interpretation results and answer questions from analysts, the following question and answer session, an analyst for the main content:
the clay analysts in Asia: the first question is about the problem of agency for “diablo 3”, the game on a global scale has achieved high sales, but in Asia, but a bit less than expected, netease agent Chinese versions of the play will cooperate with blizzard to some adaptations, such as the localization of in-game add some content to adapt to the Chinese players market? In addition, netease agent for another blizzard game “storm hero”, how do you plan to both blizzard games in the Chinese market, the time?
ding: the Chinese version of “diablo 3” and the American have different, but the surprise when I want to leave to the official launch. The storm hero “specific time, please pay attention to our announcement, we won’t come to announce our plan at present.
in the just-concluded ChinaJoy, already has a lot of players in the field experience our “diablo iii” and “storm hero”, overall feedback on the two game players is very good, also showed high expectations.
barclays Asia analyst: I actually want to ask, for the two masterpieces, netease will not separate the two point in time?
ding: would you please believe that our professional ability in this regard, we are sure to choose a right place, right time and the timing of the release both products.
barclays analysts in Asia: the second question is about electrical business is the business of selling lottery tickets of netease, this aspect of the marketing expenses are mainly used in what place? The commission is paid to the lottery sales agent? Or in order to increase the cost of the user for promotional activities? Netease lottery business business model of how?
ding lei: netease electrical business is a platform to sell not just lottery, and the game point card, phone CARDS and other products of our company, we in the market in terms of cost control is very strict and careful, we have strict indicators to measure Each spent the future money can gain value, in terms of the user so how big is this need not worry about it. We in the past ten years in terms of market investment are very pay attention to efficiency, we are not waste money.
, an analyst at credit suisse: could you introduce your roughly the current mobile business income scale, especially mobile games and mobile advertising revenue? Also can introduce this year next to the PC and mobile new game launch plan? How much of the mobile game is independent research and development of agent to is how much?
Cai An live: mobile game of income at the moment we don’t share it, but can say is that in the past year mobile gaming revenue contribution is growing so quickly.
as for the PC new games, we are looking forward to the upcoming first person shooter game “the crisis of 2015,” and a “3 d Oriental fantasy MMO game” day yu “, the two game currently get user feedback is pretty good, in the second half of this year we will launch them.
about mobile games, we will launch a few different types of games, including independent research and development also includes agent.
ding: as far as I known, we will try to release by the end of two new game “diablo 3” and “storm hero”, if there is a new project we will open in time.
, an analyst at credit suisse, the second quarter because of tax, tax rate is lower than in previous quarters, the third and fourth quarter rate can maintain the levels of around 7% in the second quarter?
Cai An live: so far this year the year of the tax rate should be around 15%, low tax rate of the second quarter is mainly for the government’s tax cuts and tax policy support.
bank of America merrill lynch analyst: netease has launched several successful mobile games, mobile games as you observe it the difference compared with the life cycle of PC game? In addition, netease now how much is the total number of staff? What’s the plan this year in terms of hiring next?
ding lei: we wish to express our mobile phone game as long as the PC cycle life cycle, when we swim in PC operations are often being asked if the game was the decline of what, but the fact proved that as long as we strive to innovation, can reduce the turnover rate of players, in hand we are also constantly in the direction of the efforts to swim. Hand swim, it should be said more challenging than end to swim in this respect, it is must be admitted that fact.
Cai An live: as of the second quarter of 2014, the company a total of about 8000 employees.
ding: our mobile game is not a two paragraphs, the future is made up of different types of various mobile game group, we have a unified achievement system and account system, the user in different game experience does not necessarily will reduce its life cycle, we’re going to use the concept of a “group” to counteract the effects of individual mobile game life cycle is short.
Morgan Stanley analyst: my first question is about the current China mobile game of the overall market environment and the strategy of netease, I think the Chinese market also like South Korea, the user or by the recreational little game to more complicated and more severe, tencent announced it to more “moderate” mobile game, netease has tried many types of mobile game, but it is possible that income is mainly from the fantasy westward journey 2 pocket edition and the edition of BFS legend, in the future you will be more attention to severe mobile game? Mild games to attract traffic, money or a serious game?
ding: your analysis is correct, mild game to let users get started very easy, but to let users pay was more difficult, this failed to hit the phenomenon is widespread. However, to make a game into a “moderate” or “severe”, it is very test of the planning of a company is the basic skills, also is not a small entrepreneurial teams can learn immediately.
netease swim in the aspects of the strategy is the combination of the mild, moderate and severe combination, use different products to meet the needs of different levels of consumer.
Morgan Stanley analyst: the second question is about your traditional PC game, and you in FPS (first person shooter) launched a hero in the game system, do you think of this system can help you to grab more market share from rivals, especially in the main competitors of FPS game has been under the condition of a certain year? The present system of player feedback?
ding lei: FPS is a big market, we also attaches great importance to, the main FPS game on the market at present is to introduce overseas, such as South Korea in the United States, including the Xbox and PlayStation, the FPS is also more important categories. FPS game before there is no social system, we now do the crisis of 2015 went into our social system and achievement system.
T.H. capital analyst: many applications in the mobile terminal has a lot of your product, but the link between the individual products is not strong, you will be how to put together these goods?
ding lei: press the client is a carrier of reading the news, youdao dictionary is a tool, English reading, cloud cloud music is based on the content of the text and music products, only easecredit is a communications products. On the mobile end, I think these products and the method and the possibility of string together much more diverse than the PC end, because it is always online, there are a lot of fragments of time, I am sure we will find a good way to put these products together. When some of our new release may I have your attention, please.
the other would like to say is, easecredit user activity and interaction are good, we are still full of confidence for the future.
T.H. capital analyst: my second question is about the hearth legend, can reveal the game of operational data, such as the number of users and the future trend of user paying behavior, etc., these data with the PC game data?
ding: on a global scale, the hearth legend in China the most users, and this group is very active, the number of concrete is revealed here. The hearth legend’s success is a very wonderful thing, this kind of card game has a huge user market and good consumer experience.
citigroup analyst: my first question is about the TV host games, what do you think if there is a huge potential in this area in the future? Netease will enter the market?
second, how do you see in the second half of this year the mobile game market competition situation, the difference with the first half of the year? In the long run, what do you think mobile gaming’s contribution to the total netease revenue will be how much?
ding lei: we also host the game on the sidelines. Host computer games and mobile games actually just in two different sizes of screen, a play on TV, a can put in my pocket to take to walk, for players, more important is to look at the experience, if mobile games can do better than the host game experience, we don’t have to enter the host game field. In the second half, we will launch a new game is PC client games and mobile games.
cicc analysts: can you say you “ninja must die” with the live soccer game research and development of agency contract? Is income share or pay a fixed fee at the beginning? If it is divided into, into how much is scale? In addition, the development of mobile game business is what impact on profit margins for the company as a whole?
ding: you speak of these games we will have a fee, guaranteed the gold, and divided into three aspects, we will strictly to assess each product specific ROI (return on investment), but the specific divided into scheme is the commercial secret is not revealed. From a financial point of view, we can control the ROI is very good.
deutsche bank analyst: my question is about the “other income” in the results, I want to know online lottery sales and Internet business income contribution of the “other income”?
Cai An live: line lottery sales and Internet business income contributed significant part of the “other income” and growing, but the specific how much we do not convenient to publish. (wood)