Group 1: Game Approval and Market Trends - In May, the National Press and Publication Administration approved 130 domestic online games and 14 imported games, totaling 144 approvals, setting a new record for monthly approvals in nearly two years [1] - Notable domestic games include Perfect World's "异环," which has garnered significant attention with 9.6 million views on Bilibili and over 2.01 million reservations on TapTap [1] - The gaming industry is showing signs of recovery, with the Chinese game market size reaching 857.04 billion yuan in Q1 2025, a year-on-year growth of 17.99% [3] Group 2: Tencent's Innovations and Financial Performance - Tencent launched an industrial-grade AIGC game content production engine, which is expected to enhance efficiency for small and independent game developers [2] - Tencent's gaming revenue for Q1 2025 reached 59.5 billion yuan, with international market revenue growing by 23% to 16.6 billion yuan [2][4] - The introduction of AI technologies in games like "和平精英" has led to a 16% year-on-year increase in user engagement [2] Group 3: Other Companies' Performance - NetEase reported Q1 2025 revenue of approximately 28.8 billion yuan, a year-on-year increase of over 7%, with net profit exceeding 10.3 billion yuan, marking a record high for the company [4] - Zhongjiu Mobile plans to launch a new game, "代号：暗夜传奇," in H1 2025, focusing on agile development to enhance competitiveness in the mini-game market [4]

Group 1: Domestic and Imported Games Approval - The National Press and Publication Administration approved 130 domestic games and 14 imported games in May, indicating continued regulatory support for the gaming industry [1] - Among the approved domestic games, Perfect World's "Yihuan" received licenses for mobile, PC, and console platforms (PS5), showcasing the potential for multi-platform success [1] - The approval of new games is expected to boost market confidence in leading gaming companies and positively impact the gaming sector [1] Group 2: Netflix's Adaptation of "Clash of Clans" - Netflix announced the adaptation of the popular mobile game "Clash of Clans" by Finnish company Supercell into an animated series, marking a strategic move to explore new content formats [2] - This initiative may attract more subscribers to the streaming platform and positively influence both the gaming and film sectors [2] - The adaptation reflects a growing trend of cross-industry collaboration, enhancing market expectations for integrated content [2] Group 3: Relaunch of "Shining! Youthful Girls" - The Chinese version of "Shining! Youthful Girls," based on "Uma Musume," will reopen its download portal after a nearly one-year hiatus, indicating a strategic shift in its operational approach [3] - The game underwent a version update with changes to UI, text, illustrations, and scenes, aiming to attract returning players [3] - This relaunch is likely to strengthen market confidence in the niche of 2D games and enhance expectations for refined game operations [3]

Group 1 - The National Press and Publication Administration issued 130 domestic game approvals in May 2025, with a notable increase in monthly approvals, reaching a new high this month [1][3] - Among the approved domestic games, 76 are mobile games, 54 are mobile-casual puzzle games, 6 are client games, and 1 is for the PS5 console, with some games receiving multiple platform approvals [1][5] - A total of 610 domestic game approvals have been issued this year, indicating a continuous upward trend in the approval rate [1][3] Group 2 - The number of imported game approvals has shifted from bi-monthly to monthly, with a consistent increase in the number of approvals each month [3] - In the latest batch of imported game approvals, 14 mobile games were granted licenses, with some receiving approvals for multiple platforms [1][5] - Notable titles among the newly approved games include Tencent's "Secret Realm Knife Boy," Perfect World's "Different Ring," and NetEase's "Fate: Stars" [5][15]

Group 1 - The company achieved a revenue of 28.8 billion yuan in Q1 2025, representing a year-on-year increase of 7% [1] - Non-GAAP net profit attributable to the parent company was 11.2 billion yuan, up 32% year-on-year, with a Non-GAAP net profit margin of 39%, an increase of 7 percentage points [1] - The overall gross profit margin was 64.1%, a year-on-year increase of 0.7 percentage points, while the gross profit margin for games and value-added services was 68.8%, down 0.7 percentage points due to changes in game product structure [1] Group 2 - Online gaming business revenue reached 23.4 billion yuan in Q1 2025, a year-on-year increase of 15%, with PC game revenue growing by 85% to 8.1 billion yuan [2] - Mobile game revenue was 15.4 billion yuan, down 4% year-on-year, primarily due to a high base from the previous year [2] - Several new games performed well, enhancing global gaming influence, with titles like "Marvel: Contest of Champions" and "Outsiders: The Tide" achieving significant sales [2] Group 3 - Youdao's net revenue was 1.3 billion yuan in Q1 2025, a year-on-year decrease of 7%, with learning services revenue declining by 16% [3] - However, core businesses such as AI college planning services and programming learning products saw sales growth exceeding 25% and 40%, respectively [3] - Net revenue for NetEase Cloud Music was 1.9 billion yuan, down 8% year-on-year, with a gross profit margin of 36.8%, reflecting a focus on ROI in content procurement [3] Group 4 - The company raised profit expectations due to strong performance in agency games and effective channel cost control, projecting adjusted net profits of 39.3 billion, 42.5 billion, and 46.7 billion yuan for 2025-2027 [4] - The target price was adjusted to 214-242 HKD, reflecting an increase of 34-36% [4] - The company maintains an "outperform the market" rating based on excellent profit performance [4]

Core Insights - The 2025 NetEase Games 520 online launch event showcased over 40 new products, emphasizing innovation in traditional genres and exploring social values through popular IPs [1] - The event highlighted the integration of digital technology with cultural heritage, particularly through the game "Yanyun Sixteen Sounds," which collaborates with Dunhuang Academy to enhance cultural transmission [2] - The gaming industry is increasingly focusing on social responsibility, with initiatives like anti-bullying campaigns and charity projects being integrated into gameplay [5][7] Product Highlights - "Yanyun Sixteen Sounds" features a collaboration with Dunhuang Academy, incorporating historical art into gameplay [2] - "Rate of the Land" announced a new season themed "Northern Expedition," allowing players to experience Zhuge Liang's historical campaigns [4] - "The Legend of the Condor Heroes" will launch a new chapter on June 12, expanding the narrative universe of Jin Yong's IP [4] Social Responsibility Initiatives - "Egg Party" launched an anti-bullying initiative, promoting mental health awareness among minors through immersive gameplay [5] - "Identity V" has been actively involved in social welfare, with proceeds from in-game items donated to support autism-related projects [7] - The game also participated in environmental initiatives, such as tree planting campaigns in Inner Mongolia [7] Industry Strategy and Development - The event introduced the "NetEase GPT Geek Youth Talent Program," aimed at recruiting innovative talents across various sectors, including gaming and AI [8] - The launch event reflects the broader trend in the Chinese gaming industry towards cultural enrichment, technological empowerment, and social responsibility [8] - The potential for digital economy growth and cultural value creation is being recognized as a key driver for industry expansion [8]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of $143 or HKD 223, indicating an expected upside of 18.2% from the current price [6][9]. Core Insights - The company showcased 40+ game updates during its 520 Game Release event, including 9 new games, with 7 being self-developed. The new games cover various themes such as Three Kingdoms, space, Marvel/Destiny IP, ocean adventure, and party life simulation, reflecting a strategy of global positioning, multi-platform deployment, and diverse genre exploration [1][5]. - The company is optimistic about the ongoing positive trends in the gaming industry, particularly in competitive gaming, and is enhancing the longevity of existing games through new gameplay, technological updates, and international events [1][5]. Summary by Sections New Game Releases - "万民长歌：三国" (Three Kingdoms): A self-developed historical strategy game with a seamless 3D map, set to start a trial on Steam on June 10 [2][4]. - "命运：群星" (Destiny: Stars): A mobile shooting game developed in collaboration with Bungie, with pre-registration already open [2][4]. - "漫威秘法狂潮" (Marvel Secret Law): A card RPG mobile game based on the Marvel IP, currently in closed testing with pre-registration available [2][4]. - "unVEIL the world": A strategy card RPG mobile game, developed in collaboration with Shueisha, with a preview released [2][4]. - "头号追击" (Top Pursuit): A PC game combining MOBA, hero shooting, and battle royale elements, set for a paid test from June 6 to June 30 [2][4]. - "无主星渊" (Unclaimed Star Abyss): A space FPS game expected to launch in summer 2025, with a final open test during the Steam Summer Festival [2][4]. - "灵兽大冒险" (Spirit Beast Adventure): A self-developed vertical turn-based MMO mobile game, currently open for pre-registration [2][4]. - "Planet Party Time": A party social game developed by NetEase Rayfire, currently in global testing on Steam, with domestic testing planned for 2025 [2][4]. - "遗忘之海" (Forgotten Sea): An ocean adventure RPG developed by Joker Studio, with pre-registration available [2][4].

Investment Rating - The report maintains a "Buy" rating for NetEase (NTES US) with a target price of $143, indicating an expected potential upside of 18.2% from the current price of $120.99 [6][9]. Core Insights - NetEase's game launch event on May 20, 2025, showcased over 40 game updates, including 9 new titles, with 7 being self-developed. The games cover various themes such as Three Kingdoms, space, Marvel/Destiny IP, ocean adventure, and party life simulation, reflecting a strategy of global positioning, multi-platform deployment, and diverse genre exploration [1][5]. - The report expresses optimism about the ongoing positive trend in the gaming sector, highlighting the company's differentiated expansion in competitive gaming genres and the long-term operation of existing games through new gameplay, technological updates, and international events [1][5]. Summary by Relevant Sections New Game Releases - "万民长歌：三国" (Three Kingdoms) - A self-developed historical strategy game launching a demo on June 10, 2025 [2][4]. - "命运：群星" (Destiny: Stars) - A mobile shooter game developed in collaboration with Bungie, with pre-registration already open [2][4]. - "漫威秘法狂潮" (Marvel Secret Law) - A card RPG mobile game based on the Marvel IP, currently in closed testing [2][4]. - "unVEIL the world" - A strategy card RPG mobile game, developed in collaboration with Shueisha, with a preview released [2][4]. - "头号追击" (Top Pursuit) - A PC game combining MOBA, hero shooting, and battle royale elements, set for a paid test from June 6 to June 30, 2025 [2][4]. - "无主星渊" (Uncharted Star Abyss) - A space FPS game expected to launch in summer 2025, with a final open test during the Steam Summer Festival [2][4]. - "灵兽大冒险" (Spirit Beast Adventure) - A self-developed mobile MMO game currently open for pre-registration [2][4]. - "Planet Party Time" - A party social game for PC, currently in global testing, with a domestic test planned for 2025 [2][4]. - "遗忘之海" (Forgotten Sea) - An ocean adventure RPG developed by the Joker Studio, with pre-registration open [2][4].

Core Viewpoint - NetEase held its annual 520 game launch event, unveiling over 40 new products, including key titles like "Yanyun Sixteen Sounds" and "Identity V" [1][30]. Product Announcements - "Wanmin Changge: Three Kingdoms" is a single-player strategy game developed by the team behind "Rate the Land." It received positive feedback during its initial testing [1][4]. - "Marvel Secret War" is a card RPG based on the Marvel IP, which has already opened pre-registration [7]. - "unVEIL the world," a collaboration between NetEase and Shueisha, is a playable manga with details revealed during the event [10]. - "Top Chase" is a fast-paced battle royale game that has received over 90% positive reviews during its overseas early access [13]. - "Uncharted Star Abyss," a space-themed FPS, will undergo its final open testing on Steam [16]. - "Spirit Beast Adventure" is a turn-based strategy mobile game with a focus on Chinese mythology [19]. - "Planet Party Time," a social game similar to Animal Crossing, will begin testing later this year [22]. - "Forgotten Sea," an ocean adventure RPG from the Joker studio, is expected to be significant given its development team's background [25]. Market Trends and Company Strategy - The trend of single-player games is on the rise, and NetEase's focus on this area is seen as a strategic move [4]. - The company has a diverse product matrix, including popular IPs like "Onmyoji" and "Dream Journey to the West," indicating its ability to cater to various gaming genres [33]. - The success of "Yanyun Sixteen Sounds," which surpassed 30 million players, highlights NetEase's potential for long-term growth in the gaming sector [30][31]. - The 520 event reflects NetEase's ongoing strategy of exploring and developing new gaming possibilities rather than rushing to market [28].

Core Insights - The net revenue from games and related value-added services for Q1 2025 reached 24 billion yuan (3.3 billion USD), showing a year-on-year growth of 12% and a quarter-on-quarter growth of 13% [2] - The growth is attributed to strategic changes, with a focus on a more diverse product lineup and a shift towards a "full category + full platform" approach [2][9] Revenue Growth Analysis - Concerns prior to the earnings report centered around project adjustments and the transition of old and new products, particularly the decline in top-ranking titles on the iOS bestseller list [3] - The Q1 earnings report alleviated these concerns, highlighting revenue growth driven by titles such as "Identity V" and new games like "Yanyun Sixteen Sounds" and "Marvel Duel" [3][4] - Notably, "Identity V" achieved a new quarterly revenue high, while "Egg Party" saw record user acquisition during the Spring Festival [3][4] Product Strategy and Market Expansion - The focus on the global PC market and cross-platform growth has become a significant change in NetEase's gaming ecosystem for 2025, contributing notably to Q1 revenue growth [4] - "Identity V" and "Seven Days World" have shown strong performance, with "Seven Days World" achieving a 90% increase in online users and a 500% increase in payments on the PC platform [6] - The company is strategically moving towards a "full category + full platform" model, emphasizing product quality over quantity in new releases [9] Esports Development - NetEase has been actively developing its esports initiatives since 2018, with recent successes in securing spots for "Identity V" and "Naraka: Bladepoint" in the 2026 Asian Games [10][12] - The esports ecosystem is expected to enhance the revenue potential of established titles, with plans for increased resource allocation to support competitive gaming [12][21] - Upcoming titles like "Marvel Duel" are also set to establish a competitive ecosystem, aiming to improve game metrics through efficient content updates [15][21]

Core Insights - The core themes of the recent NetEase conference are "stability" and "transformation," focusing on long-term game development and the introduction of new titles [1]. Group 1: Long-term Strategy - NetEase emphasizes the development of evergreen games, with CEO Ding Lei stating that titles like "Egg Party" and "Marvel Showdown" are expected to operate for at least 10 years [1]. - The company showcased its commitment to long-term projects, highlighting "Yanyun Sixteen Sounds" as a sustainable project for the next 5-10 years [1]. Group 2: New Game Releases - The conference introduced 9 new games, indicating a desire to break out of comfort zones and explore new genres [2]. - The new titles include various genres such as strategy, shooting, card games, and adventure RPGs, with a focus on unique gameplay experiences [2][3]. Group 3: Platform and Quality Breakthroughs - A significant portion of the new games are PC-based, marking a strategic push into the PC gaming market [3]. - The new titles are backed by notable collaborations, including partnerships with Bungie and Marvel, indicating a focus on high-quality game development [3]. Group 4: Game Details - "Ten Thousand People Long Song: Three Kingdoms" is highlighted as NetEase's first standalone PC strategy game, featuring a seamless open world and strategic depth [6][8]. - "Destiny: Rising" is a shooting mobile game developed in collaboration with Bungie, featuring both FPS and TPS perspectives [10][12]. - "Marvel Mystic Mayhem" is a tactical RPG that incorporates dynamic storytelling and card-based gameplay [14][15]. - "unVEIL the world" is a card game developed with Shueisha, featuring character designs by renowned manga artists [17][19]. - "Supervive" is a tactical competition game developed by a studio founded by a former executive of "League of Legends," showcasing a unique gameplay style [20][22]. - "Uncharted Stars" is a team shooting game set in space, developed by a studio founded by Blizzard's co-founder [24][25]. - "Spirit Beast Adventure" is a flagship MMO with a focus on pet mechanics and lightweight gameplay [28]. - "Planet Party Time" is a life simulation game with party elements, expected to launch in the domestic market [29][31]. - "Forgotten Sea" is an ocean adventure RPG that recently revealed its concept trailer and is set for testing [32][34].