Great prospects for games going abroad，how to analyze NetEase's investment logic
NetEase launched its new game "Diablo Immortal" overseas this month, which quickly climbed to the top of the various download and box office charts. Regarding NetEase's investment logic, Guohai Securities respectively analyzed the two main business segments, games, and NetEase Cloud Music.
Key Takeaways：
1. Games account for more than 70% of the total, with a clear game head effect
(1) From developing its MMORPG, the classic game has a very long life cycle
With a large MMO handheld game structure and deeply buried lines, NetEase has formed enough competitive barriers in terms of R&D strength. Almost every game of NetEase has its incentive features to meet the needs of increasingly diversified game users. For example, the original talent skill system of the "Sinister" hand game, and "Chu Liu Xiang" added face pinching and photosystem.
(2) Three major driving forces for games: end-game to hand-game + IP horizontal derivation of multi-category products + continuous output of new IP
(3) Stronger advantages for games going to sea
In terms of products, most of them are of high quality, with differentiation and creativity, leading to the identity of the target market, avoiding to some extent high homogeneity competition.
In terms of distribution, the local team has been resumed to carry out the independent deep and long-term operations and work personally. Most of the games that have gone overseas are independently distributed by NetEase.
In terms of channels, overseas distribution channels are more unified, competing with other manufacturers in the same starting line, and the share ratio is higher overseas after deducting channels.
2. NetEase Cloud Music: a fast-growing dark horse
(1) Music user profile: targeting young groups, with labels such as Two-dimensions and trendy
NetEase Cloud Music targets the young circle and launches personalized song lists. According to the Aurora Big Data report, the proportion of young users of Netease Cloud Music among online music APPs is the highest among similar APPs. In addition, the scale of overlapping users of Netease Cloud Music with bilibili and Tik Tok is much higher than that of Tencent's APPs, with outstanding Two-dimensions, and young and trendy qualities.
(2) Business model focuses on the B2C model
The profit model of NetEase Cloud Music mainly consists of advertising, user fees, points mall, and a ticketing system.
(3) The proportion of social entertainment services and other revenues continued to increase, and the ARPU of monthly active users grew steadily
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