NetEase Q2 profit down 22% as China begins online gaming curb
14:17, 31 August 2021
Chinese online services company NetEase second quarter net profit fell 22% on higher operating costs as Chinese authorities began a clamp-down on online gaming activities.
For the second quarter ended 30 June, net profit fell to RMB3.54bn ($548.5m) from RMB4.54bn ($702.7m) a year earlier while revenue rose 12.9% to RMB20.52bn ($3.18bn) from RMB18.18bn ($2.81bn) in the same period last year., according to a release. One Chinese yuan is valued at US$0.155.
NetEase said Q2 revenues from online game services were RMB14.53bn ($2.25 bn) compared with RMB13.82bn ($2.14bn) for the second quarter of 2020 with net revenues from mobile games accounting for approximately 72% of online gaming revenues.
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"Our existing games grew steadily despite a high base last year, and we are excited about our robust pipeline of new titles that builds on our leading game roster," NetEase chief executive William Ding said in the release.
The Hangzhou-based company said that quarter-on-quarter increases in operating expenses were mainly due to increased marketing expenditures and research and development investments.
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China curbs online gaming time for under-18s
NetEase is known for game titles such as Naraka: Bladepoint, which launched on Steam in August, as well as flagship titles Fantasy Westward Journey and Westward Journey Online, and popular games including Life-After, Onmyoji and Onmyoji Arena. Mobile game Harry Potter: Magic Awakened, co-developed by NetEase and Warner Bros. Interactive Entertainment under the Portkey Games label, will launch on 9 September.
On Monday, Chinese authorities unveiled new rules requiring companies to limit online game time for children under the age of 18 to three hours per week. Previously Chinese children were able to play online daily for up to 1.5 hours.
The announcement is the latest in a wave of regulations sweeping China's online economy with curbs on "sharing" economy firms such as ride-sharing app Didi, online tutoring, certain cryptocurrency activities and foreign IPOs of certain Chinese companies.