Netease's operating expenses have almost doubled due to the development of new PC titles
The Chinese developer and publisher Netease increased operating expenses by 75% in the 1st quarter of fiscal year 2018. The increased expenses of the company are associated with the development and publication of new games for the PC platform, for which Netease has big plans.
This is stated in the company’s quarterly report.
Part of the expenses is related to the development of the PC version of the mobile “royal battle” Knives Out. This project originated as a mobile clone of the famous online action movie PLAYERUNKNOWN’S BATTLEGRONDS, but now Netease wants to turn it into something more. For example, the company hired the screenwriter of the movie “Battle Royale” Kenta Fukasaku to work on the plot of the supplement for Knives Out.
In addition, the publisher is preparing to release a new role-playing MMO Justice, made in the style of Chinese heroic fantasy.
Netease spent $756.7 million for these purposes last quarter. The company’s chief financial officer, Charles Yung, believes that the investments will pay off over the next quarters.
Netease financial results in the 1st quarter of 2018
From January to March 2018, Netease earned $2.3 billion. The company’s revenues increased slightly (by 3.9%) compared to last year.
Netease online games generated $1.4 billion. 72% of this amount earned mobile titles. The company noted that they are satisfied with the quarterly results of the Knives Out and Terminator 2 games.
At the same time, the gross profit of the publishing house decreased by 20% and amounted to $949.1 million. In Netease, the decline was explained by a decrease in revenue from mobile games, in particular — Onmyoji and New Ghost.
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