(Chinese Version)

　　According to NetEase’s Q1 Earnings, the company’s revenue has grown by 72.3% year-on-year to ￥13.641 billion. Its net profit has jumped by 62.6% year-on-year to ￥4.336 billion. Among all businesses, the gaming business has generated a revenue of￥10.735 billion, a year-on-year growth of 78.5%, maintaining a fast growth.

　　NetEase states in the report that driven by self-developed mobile gaming business, the company has achieved a great performance in Q1. “We will continue to innovate on the content and acquire more users,” NetEase said.

　　From the past PC client gaming era to today’s mobile gaming era, NetEase has transformed into the only matching force in the Chinese gaming sector that can compete directly with Tencent. This is also reflected by the two companies’ performance on the App Store, as the pair nearly conquers the Top 10 Chart.

　　However, it’s evident that the Chinese gaming industry is quickly entering the e-sports era, where PC and mobile games would gradually enter the e-sports realm. As the second largest gaming company in China, however, NetEase is quite lost in this new trend in the industry.

　　In the mobile gaming sector, though started late, NetEase was still able to keep up the pace by rolling out quality games, eventually possessing the power to compete with Tencent. But can NetEase achieve similar success in e-sports?

　　In our previous perception, e-sports was created to serve the games themselves. That said, e-sports is expected to promote the gaming products, maintain game popularity, and help out the marketing campaigns etc.

　　In the early phase of the e-sports industry, both Valve and Blizzard Entertainment both shared the similar thought on e-sports. When the industry was dominated by Blizzard Entertainment’s StarCraft and Warcraft, a great number of third-party e-sports events emerged. However, Blizzard Entertainment itself had never held any official e-sports events. It’s only carnival event is more of an invitational tournament for fans to watch.

　　Image Credit: tpreview

　　Third-party competitions’ goal at the core is not profit. For instance, WCG, the Olympics in the e-sports field, has been losing money for years. It’s directed by Samsung’s display department and later supported by Samsung’s smartphone department. Its main goal is to promote Samsung’s products. At nature, it’s no different from advertisements on TV or outdoors advertisements.

　　Blizzard believes that e-sports competitions are money burners. Currently, there are a great number of third-party e-sports events that can promote and serve the games, and therefore there is no need to establish e-sports operation.

　　However, Blizzard is, in fact, making e-sports operation and has established an e-sports department. The gaming company has also acquired MLG. Most significantly, Blizzard has stated in the user terms that any e-sports event involving Blizzard’s games should be authorized by Blizzard.

　　Whether it’s Blizzard or other gaming companies, many of them have shown major interest in e-sports, recognizing its great commercial potential in this era.

　　There are numerous data reports that can confirm the commercial benefits of the e-sports industry.

　　For instance, China’s gaming industry cashed in ￥165.57 billion in 2016 with a gamer base of 566 million. The income showed a 17.7% surge while the gamer base showed a 5.9% growth.

　　It’s apparent that whether it’s looking from the market scale, or user base, the Chinese gaming market is in fact saturating. The explosion in mobile gaming contributed by the demographic pidend is fading and is coming to an end.

　　That said, the Chinese gaming industry is not going to have much shift in the near future. The rapid rise of the VR gaming industry has already helped the Chinese gaming industry reach the ceiling of the gaming market.

　　After reaching the ceiling, once a gaming company’s performance grows by 1%, that would mean it has taken that 1% performance from other companies. The competition will only get fiercer.

　　In this case, gaming companies are eyeing other directions for growth. The greater entertainment market is one of the directions, while e-sports has the potential to be a growth driver.

　　As the second largest gaming company in China, NetEase would definitely notice the trend. To keep up with the trend, NetEase has initiated its greater entertainment business, already having success in the online fiction, animation, and music sector. However, NetEase hasn’t been able to gain momentum in the e-sports sector. So far NetEase has been more of an observer.

　　In fact, NetEase does have a few moves going on in the e-sports sector. On April 2nd, 2013, NetEase held an e-sports strategic press conference at the National Stadium in Beijing, where Ding Lei announced NetEase’s e-sports strategy.

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