NetEase, Inc. Q4 FY2025 earnings call

• AI Integration: Comprehensively integrated AI across internal workflows (design, programming, art, QA). Tools like CodeMaker, DreamMaker, etc., enhanced productivity. AI used in programming, art, and QA to improve efficiency and gameplay.
• Game Launches and Performance: Where Winds Meet surpassed 80 million cumulative players, Sword of Justice expanded internationally, Marvel Rivals gained momentum. Fantasy Westward Journey Online and Mobile had strong annual revenues.
• Global Expansion: Titles like Where Winds Meet and Marvel Rivals performed well globally. New titles like Sea of Remnants in technical testing and ANANTA in development.
• Other Business Lines: Youdao advanced AI-native strategy, NetEase Cloud Music focused on ecosystem development, Yanxuan strengthened private label brand.

In 2025, total annual net revenues reached RMB 112.6 billion. Games and related value-added services contributed RMB 92.1 billion, up 10% from 2024. For the fourth quarter, games and related value-added services net revenues grew 3% year-over-year to RMB 22 billion. Youdao's 2025 net revenues increased ~5% year-over-year to RMB 5.9 billion, with fourth quarter net revenues up 17% to RMB 1.6 billion. NetEase Cloud Music's full year 2025 net revenue decreased 2% to RMB 7.8 billion, while fourth quarter net revenues increased 5% to RMB 2 billion. Innovative business and others had full year 2025 net revenues of RMB 6.8 billion, with fourth quarter net revenues down 10% year-over-year but up 42% quarter-over-quarter.

• Continue to invest in AI integration across game development workflows.
• Expand game pipelines with new titles like Sea of Remnants and ANANTA.
• Maintain focus on global expansion and delivering high-quality experiences across business lines.

• Challenges in harnessing AI effectively, such as fitting probabilistic AI into game software engineering processes.
• Market competition and barriers to entry for new game developers despite AI lowering some entry barriers.

Q: Discuss the impact of AI on the competitive landscape for the online gaming industry and where NetEase primarily focuses its AI investments?

A: AI lowers entry barriers but raises success thresholds for top-tier games. NetEase focuses on building AI expertise for games, using vertical models trained on gaming data, and integrating AI to improve user experience and commercial value.

Q: Share retention rate of Where Winds Meet overseas users and key factors contributing to its strong performance abroad?

A: Where Winds Meet has strong retention, with factors including immersive Wuxian open-world experience, low-pressure high-freedom gameplay, cross-platform availability, and continuous updates.

Q: Will the business model of FWJ PC Unlimited server be replicated across other legacy titles?

A: The product team listens to player feedback and will continue to introduce updates across more titles, providing richer experiences while restoring confidence.

Q: Update on Sea of Remnants' development status, testing feedback, commercialization method, and launch timing?

A: Development is on track, plan to launch in Q3. Technical test had positive feedback. Commercialization method being developed, expected launch in Q3 with cross-platform global launch.

Q: Strategy for Auto Chess titles and differentiation against competitors?

A: Selects Chinese Demon and Ghost culture for differentiation, aiming to build a high-quality Auto Chess game using proven development capabilities.

Q: Overseas expansion strategy, product pipeline for U.S. and Europe, and talent strategy?

A: Developed a path to success in overseas markets, plans to continue producing successful titles, and leverages China's deep talent pool in game development for global premium games.

Q: Future life cycle strategy for Marvel Rivals and potential of AI in gameplay design?

A: Marvel Rivals will sustain momentum with innovative content updates. AI has potential to drive transformative player experiences, with NetEase aggressively exploring AI-driven gameplay as a growth engine.