Shulou(Shulou.com)11/24 Report--

According to the news on the evening of August 24, Beijing time, NetEase today released its financial results for the second quarter of 2023 as of June 30: revenue was 24 billion yuan, up 3.4 percent from the same period last year; net profit from continuing operations belonging to the company's shareholders under non-GAAP was 9 billion yuan, compared with 5.4 billion yuan in the same period last year, an increase of 67 percent over the same period last year.

After the release of the results, senior executives such as NetEase CEO Ding Lei, CFO Yang Zhaoyi and Vice President Hu Zhipeng attended the subsequent earnings call to interpret the main points of the results and answer analysts' questions.

The following are the main contents of the question and answer session of the teleconference:

Morgan Stanley analyst Alex Poon: I have a question about "upstream cold" mobile games. Could you please introduce to the management what role artificial intelligence plays in improving the revenue and user stickiness of mobile games? Why can "against the cold" become China's first artificial intelligence technology successfully landed the game? What is the difficulty? What is the management's vision for the future of the game?

Hu Zhipeng: the application of artificial intelligence in "upstream cold" mobile games mainly includes two aspects: improving the efficiency of research and development and improving user experience.

In terms of improving the efficiency of research and development, we have used artificial intelligence to improve efficiency in art production and program development. More importantly, in the whole process of game research and development, we have changed from the idea of "game plus artificial intelligence" to that of "artificial intelligence plus game".

In other words, from the very beginning, it is assumed that the whole world is based on a large model of artificial intelligence, improving the user experience of players in all aspects, from the initial customization of characters to the interaction with the whole world after players enter the world. in every aspect, we use artificial intelligence to efficiently produce content and enhance interest to enhance players' rich open world experience.

We have also observed that players show strong stickiness to the game under such a novel experience, as well as good and spontaneous communication, which plays a very important role in attracting PC games and non-online game users, and we continue to iterate through the content experience driven by artificial intelligence technology.

What I want to make clear is that this work cannot be done overnight. Since Alpha go defeated Lee se-dol in 2017, we have noticed that artificial intelligence will have a great impact and change on the content industry in the future. Since then, we have begun to prepare for today, and in the whole process, we have overcome a lot of difficulties. Today's success is also the result of years of continuous investment in artificial intelligence.

CICC analyst Yang Bai: after "Egg Party", "Peak Speed" and "against the Cold" this year, another new game, "all-Star Street Ball Party", has a very good performance after its launch, and now it has reached No. 8 on the best-seller list.

Could you ask the management to share your views on the game? What do you think of the opportunities for sports games? In addition, we have recently seen that the company has released a promotional video of an urban open world-themed game "Code: infinity", which may seem to be another blockbuster product. Could you also ask the management to introduce this game?

Hu Zhipeng: with regard to the all-Star Street Ball Party, this is our attempt at sports games, especially basketball games. In the establishment of an open team, we require all members to be basketball enthusiasts, from the producer to the main planner and the main program are members of the basketball team, they have always had a very strong enthusiasm to do a good job. Through constant tuning and trial and error, the overall art style and feel of the game are finally adjusted to a very good degree.

Our expectation for this game is to dig deep into a category, do a good job in the services of core groups, expand its user boundaries, and eventually occupy a place in this category.

On the second question, "Code: infinity" is a combination of the two-dimensional game and the development world field, which is related to game research and development technology, including big data generation, artificial intelligence and other comprehensive upgrading of a game and research and development attempt to further consolidate our strength in the research and development of artificial intelligence games and provide an open city game experience for two-dimensional gamers. We have been preparing for this purpose for a long time, and I believe we will be able to meet with you in the near future.

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