NetEase executives interpret Q2 financial report: Ever since Alpha defeated Lee Sedol, they have noticed that AI will have a huge impact on content

NetEase released its second quarter financial report for 2023 today. As of June 30, the company's revenue reached 24 billion yuan, a year-on-year increase of 3.4%. According to non-GAAP, the company's shareholders' net profit from continuing operations was 9 billion yuan, compared with 5.4 billion yuan in the same period last year, a year-on-year increase of 67%

After the release of the financial report, NetEase CEO Ding Lei, CFO Yang Zhaoxuan and Vice President Hu Zhipeng, etc. Company executives attended the subsequent earnings call to explain key points and answer questions from analysts.

The following is the main content of the Q&A session of the conference call:

Morgan Stanley analyst Alex Poon: I have a question about the mobile game "Backwater Cold". Could you please introduce to the management what role artificial intelligence has played in improving the revenue and user stickiness of the mobile game "Ni Shui Han"? Why can "Ni Shuihan" become China's first game to successfully implement artificial intelligence technology? What's the difficulty? What is management's vision for the future of this game?

Hu Zhipeng said that the application of artificial intelligence in the mobile game "Nishuihan" mainly focuses on improving R&D efficiency and improving user experience.

In terms of improving R&D efficiency, we use artificial intelligence to Improve efficiency in art production and program development. More importantly, throughout the game development process, our thinking has changed from "games plus artificial intelligence" to "artificial intelligence plus games"

It has been assumed from the beginning that the entire world is built on an artificial intelligence Based on the large model, we are committed to improving the player's user experience. Whether it starts with the player customizing a character or the player's interaction with the entire world after entering the world, we enrich the player's experience in the open world by efficiently producing content and improving fun.

We also observe It can be seen that players have shown strong stickiness to the game under such a novel experience, and have good and spontaneous communication, which has played a very important role in attracting client game and non-online game users. We are also continuing to iterate this A content experience driven by artificial intelligence technology.

What I want to express is that this work does not happen overnight. Since AlphaGo defeated Lee Sedol in 2017, we have realized that artificial intelligence will have a huge impact and change on the content industry. From that point on, we started preparing for today. Throughout the process, we have overcome many difficulties. Today’s success is also the result of our continuous investment in the field of artificial intelligence over the years. After "Speed" and "Backwater", there is another new game "All-Star Streetball Party" which has performed very well since its launch and has now reached No. 8 on the best-selling list.

Could you please share your thoughts on this game? What do you think of the opportunities in the sports gaming circuit? In addition, we have recently seen that the company released a promotional video for an urban open world game "Codename: Infinity". It looks like it may be another blockbuster product. Can the management also introduce this game?

Hu Zhipeng said that "All-Star Streetball Party" is our attempt at sports games, especially basketball games. When forming an open team, we require all members to be basketball enthusiasts. From producers to main planners and main programmers, they are all members of the basketball team, and they have always been passionate about this project. After continuous optimization and trial and error, we finally successfully adjusted the art style and feel of the overall game, reaching a very good level

Our expectation for this game is to deeply develop a category and do a good job in the core Group services, expand its user boundaries, and eventually occupy a place in this category.

Regarding the second question, "Codename: Infinity" is our hope to combine the two-dimensional game with the world of development. It is a comprehensive upgrade of related game development technologies, including big data generation, artificial intelligence, etc. A game and research and development attempt to further consolidate our strength in artificial intelligence game research and development, and provide an open urban game experience for two-dimensional game players. For this purpose, we have been preparing for a long time, and I believe that we will be able to do so in the near future. Meet everyone

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