NetEase, Inc_ Marvel Rivals Season 1 Performance Suggests Further Upside

Industry/Company * Industry: Online gaming and entertainment * Company: NetEase, Inc. (NTES.O, NTES US) Key Points * Marvel Rivals Season 1 Success: The first season of Marvel Rivals, a new game launched by NetEase, has been a major success. The peak number of players reached over 644k on Steam, a new high and 35% more than the debut level. The game has topped Steam's global best-seller rankings and received positive feedback from players. * Milestone for NetEase: This success marks a significant milestone for NetEase's overseas expansion strategy, as it demonstrates the company's ability to develop and launch successful games for foreign players. * Revenue Contribution: The strong performance of Marvel Rivals suggests that it will contribute more than the current forecast of Rmb3.5bn annually to NetEase's revenue. * Importance of Marvel Rivals: Marvel Rivals is considered more important than another new title, Where Winds Meet, in terms of contributing to NetEase's 2025 growth. * Upcoming Releases: NetEase has a strong pipeline of upcoming games, including FragPunk, which is expected to be an important title for its overseas expansion. Additional Information * Revenue Sharing Agreement: NetEase's revenue-sharing agreement with Marvel may limit its profit margins from Marvel Rivals. * Valuation: NetEase is currently valued at 13.5x 2025e P/E, compared to 15-30x for US/EU publishers. * Risks: Risks to upside include slower growth, limited overseas exposure, and weaker-than-expected margins.