NetEase to boost game roster as profit rises 49pc

PUBLISHED : Friday, 19 November, 2010, 12:00am
UPDATED : Friday, 19 November, 2010, 12:00am plans to boost its online games portfolio next year to raise its domestic market share, after posting a higher-than-anticipated 49 per cent jump in net profit in the quarter to September.

The Beijing-based firm, which is the mainland's third-biggest online games operator after Tencent Holdings and Shanda Interactive Entertainment, yesterday reported third-quarter net profit of 585.3 million yuan (HK$681.1 million), up from 393.8 million yuan a year earlier, owing to strong online games and advertising revenue.

Profit was expected to be 531.4 million yuan, according to the average of eight analysts' estimates compiled by Bloomberg.

Total revenue rose 59 per cent to 1.4 billion yuan from 879.4 million yuan the previous year.

Chief executive William Ding Lei described's in-house developed Fantasy Westward Journey as 'the leading catalyst for our year-on-year online revenue growth of over 60 per cent'.

The other big contributors were World of Warcraft, a role-playing game licensed from United States-based Blizzard Entertainment, and locally developed Heroes of Tang Dynasty and Tianxia II.

'We are working on expanding our game market share with new games under development,' Ding said. 'We expect the next expansion pack for Fantasy Westward Journey will be released in the first quarter next year.'

Revenue from online advertising services rose 88 per cent year on year on activities supporting the 16th Asian Games in Guangzhou and an upturn in mainland advertising activity during the third quarter.

Increased marketing and promotion for its games led to higher total operating expenses of 372.2 million yuan, up from 218.9 million yuan a year earlier.

Acting chief financial officer Onward Choi said Nasdaq-listed had a total cash and time deposit balance of 8.8 billion yuan, which could help fund new online game licence opportunities, a potential share buyback or dividend payouts.

Play money

In-house game leads the way for year-on-year online revenue growth

The percentage increase in revenue at NetEase from the third quarter in the previous year: 59%