MoonFox Data’s Insights on NetEase Q3 Financial Report: Game-driven Multi-segment Growth

CHENGDU, China, Nov. 29, 2023 /PRNewswire/ — About us: Aurora Mobile (NASDAQ: JG) established in 2011, is a leading customer engagement and marketing technology service provider in China. Its business includes notification services, marketing growth, development tools, and data products. As its sub-brand, MoonFox Data is a leading expert in data insights and analysis services across all scenarios, aiming to help companies gain market insights and empower precise decision-making.

On November 16, 2023, NetEase announced its 2023 Q3 performance. The overall net revenue reached 27.3 billion yuan, increasing by 11.6% on a year-on-year basis and above 14% on a month-on-month basis. Combined with the performance of the first half of the year, NetEase’s overall operation revenue in 2023 will ultimately realize notable growth.

At the business level, the game revenue reached 21.8 billion yuan with a year-on-year growth of 16.5%, providing a core driving force for the overall growth. Youdao and innovation-related and other businesses registered slightly growing revenues of 1.5 billion and 2 billion yuan, respectively. The revenue of NetEase Cloud Music registered 2 billion yuan, declining 16.3% from the previous year. The excellent performance of games, Youdao, and innovation-related businesses outperformed expectations, and the company’s current capacity to generate revenues is quite promising.

 Ⅰ. Games: “Justice Online” took the baton to drive revenue, and “Eggy Party” entered a phase of burgeoning growth

Strong market presence of new games and positive user feedback are the key to the steady growth of NetEase’s game business revenue in the third quarter, the standout ones of which including Dunk City Dynast featuring streetball gameplay, AAA standard racing simulation game Racing Master and the most remarkable “Justice Online.”

“Justice Online” MAU & MoM growth from June to October 2023


MAU (in million/person)

MoM change



-2.08 %



-8.36 %



0.18 %



63.71 %




Data Source: MoonFox iApp; Data Collection Period: June to October 2023. The statistical results only include app data and do not include traffic data from web pages, mini-programs, or quick apps, among others, within the WeChat ecosystem.

According to the company’s official financial data, there are currently more than 50 million registered users of “Justice Online.” According to MoonFox iAPP data, after the initial bonus period for the game launch, the game’s MAU has stabilized at around 10 million, 10.368 million exactly in October 2023. Relying on the client game platform, the “Justice Online,” on the backdrop of three major martial arts novels, had attracted many players before the launch of the mobile game. The open-world environment with a martial arts twist within the mobile version also garnered the attention of a large number of non-NetEase players. According to the Q3 financial report conference call, more than one-third of players of this mobile game are completely new to NetEase games. The company was successful in growing its user base thanks to the martial arts MMO experiment.

We estimate that “Justice Online” generated between 2 and 2.5 billion yuan in revenue for NetEase in Q3 when combined with the company’s overall revenue and the growth ratio of the gaming industry. The content-driven gameplay with big map/event updates and unique plot progression with intelligent NPC interaction helped attract players and enhance engagement. Still, the core of its steady growth lay in the price competitiveness of micropayment.

“Justice Online” player attributes distribution in October 2023




49.78 %


50.22 %



19.30 %


consumption players

36.10 %



44.60 %

Data Source: MoonFox iApp; Data Collection Period: October 2023. The statistical results only include app data and do not include traffic data from web pages, mini-programs, or quick apps, among others, within the WeChat ecosystem.

According to MoonFox iApp data, the medium- and low-consumption players of “Justice Online” mobile game account for 36.1% and 44.6%, respectively. In comparison, the ratio of the high-consumption players is only less than 20%. Different from the highly time-intensive gameplay and high-level of consumption of typical MMORPG games, “Justice Online” first launched the 6 yuan-priced fashion series, refreshing players’ recognition of game prices and revitalizing a certain group of users with the backing of official advertisements. Moreover, the game canceled the attribute benefits of fashion items to avoid the spending for attribute enhancement. Additionally, compared to other MMOs of a similar nature, the in-game gift packages and battle passes are much less expensive. The success of “Justice Online” served as a primary catalyst for NetEase’s Q3 gaming business development, first by evoking a sentimental attachment, then capturing players with novel gameplay and great cost-effectiveness, and retaining them through content.

In addition, the excellent performance of the old flagship games provided a basic guarantee for the company’s game business. MoonFox iApp data reveals that in October 2023, the MAU of Fantasy Westward Journey Online mobile game exceeded 3.86 million with a MoM increase of 5.99%. “Identity V” had a MoM increase of 6.47% within the same period, and its MAU surpassed 7.03 million. Among them, “Eggy Party” secured the most market hype.

Eggy Party” monthly average DAU & MoM growth from February to October 2023


Monthly average DAU

(in million/person)

MoM change



-1.75 %



-30.32 %



12.11 %



33.07 %



-0.65 %



-6.82 %



-10.04 %



-21.05 %



-7.22 %

Data Source: MoonFox iApp; Data Collection Period: February to October 2023. The statistical results only include app data and do not include traffic data from web pages, mini-programs, or quick apps, among others, within the WeChat ecosystem.

After the cyclical marketing operations concluded, there was a minor decrease in overall buzz, but “Eggy Party’s” prominent DAU attribute persisted. According to MoonFox iApp data, the monthly average DAU of “Eggy Party” in October 2023 reached 9.642 million, declining from the previous month. As the winter and summer vacations are regarded as important time windows for Party Games, the company seized the idle time of players to launch marketing campaigns on platforms such as Douyin and Xiaohongshu, registering a DAU of nearly 20 million both in February and August.

The competition in the Party Game field is increasingly intensifying nowadays. We believe “Eggy Party” will face more severe challenges in the industry. On the one hand, minigame platforms are making a strong push. By integrating WeChat Channels, livestreaming, and other forms, minigames will exhibit an amplified dissemination capacity. With better livestreamin effects and community attributes that better fit WeChat platforms, more lightweight Party Games will be staged on minigame platforms to split the top-tier traffic. On the other hand, the industry leaders are also stepping up efforts in this category. For example, Tencent’s Party Game “DreamStar” (Yuan Meng Zhi Xing), officially authorized by Fall Guys, has initiated the open β test 2 and received positive responses in the market. To sustain its DAU level and increase its popularity, “Eggy Party” will need to hold onto its core player base and extend into minigame platforms in the future.

II. Music: Retain Listeners by Combining Copyright and Community Methods, With a Focus on Online Music Services

NetEase Cloud Music revenue and share trend from Q1 2022 to Q3 2023

Revenue (in billion yuan)

Share of NetEase’s overall

revenue (%)



8.78 %



9.46 %



9.65 %



9.37 %



7.82 %



8.12 %



7.24 %

Data Source: MoonFox iApp; Data Collection Period: Q1 2022 to Q3 2023. The statistical results only include app data and do not include traffic data from web pages, mini-programs, or quick apps, among others, within the WeChat ecosystem.

Data from the financial report indicates that NetEase Cloud Music’s total revenue in Q3 2023 was 1.973 billion yuan, which is a decrease from the same period the previous year. Generally, the revenue level of this business in 2023 is significantly lower than that in 2022, mainly owing to the overall tightened supervision of social entertainment services in the music industry and the active business contraction of the leading companies.

Audio livestreaming is the core business in social entertainment services. However, due to the relatively low threshold of livestreaming and difficulties in regulating live content, a large number of medium- and small-scale audio livestreaming platforms have emerged. Furthermore, there is an influx of soft pornography, violence, gambling, and other unhealthy content that have bypassed restrictions. In view of this, the regulatory authorities have introduced corresponding regulations, and more than 30 platforms have been closed for rectification since the beginning of 2023.

The 2023 H1 financial data of NetEase Cloud Music shows that its music and social entertainment service users reached 1.525 million, increasing by 23.4%. Still, the monthly revenue per paid user was 199.3 yuan, down 39.6% from the previous year. On the one hand, the company actively regulated the livestreaming rooms disseminating bad content inside the platform, built corresponding control systems, and reduced the revenue-sharing ratios of some streamers and associations. On the other hand, both NetEase and Tencent hope to direct more resources to online music services to meet the music, social, and fandom-related needs of listeners, so NetEase Cloud has begun to limit the exposure of some livestreaming functions within the sites to optimize the experience of online music service users.

The online music service is the main thrust of NetEase Cloud Music’s current efforts, which gained 41,751,000 users per month in the first half of 2023, with an increase of 11%. As of Q3, the MAU of the platform’s online music service remained steady at around 200 million. At present, increasing user recognition of the platform tone and music content while promoting content ecology and product innovation are at the core of NetEase Cloud Music’s development.

NetEase Cloud Music vs. industry average user usage time from January to October 2023 (in billion hours)

NetEase Cloud Music user

usage time

MoM increase (%)

Industry average user usage




7.27 %




-17.98 %




3.09 %




5.09 %




7.96 %




2.31 %




-7.08 %




3.67 %




-18.61 %




10.86 %


Data Source: MoonFox iApp; Data Collection Period: January to October 2023. The statistical results only include app data and do not include traffic data from web pages, mini-programs, or quick apps, among others, within the WeChat ecosystem.

According to MoonFox iApp data, NetEase Cloud Music users’ monthly usage time remained stable at 100 million hours in 2023, increasing to 108 million hours in October by 7.3% year-on-year, which was significantly higher than the industry average of 30-40 million hours. To get users’ attention, NetEase Cloud Music first emphasized on copyright content and then collaborated with Li Yuchun, The Big Band, and other famous musicians and platforms in Q3 2023. Second, private DJ functions were added to increase individualized music qualities further and establish tailored private roaming music spaces for users. Finally, niche music audiences are still significant in maintaining the platform tone of NetEase Cloud Music and shaping the community culture. For example, the company has launched “Project Cloud Ladder,” “Project Stone,” and other initiatives to support original musicians and build a niche community culture.

Above all, we believe NetEase Cloud Music should put more effort into community shaping and improving user stickiness through song reviews and social sharing. Meanwhile, it should also further integrate the music player and scenes into the games based on Eggy Party’s successful cases (e.g., custom music skins and membership gifting).

III. Education: Learning Service Revenues Increased, With Large Models Leading Future Growth

In Q3 2023, Youdao’s revenues reached a record-high 1.54 billion yuan. Among them, the net revenue of learning services reached 950 million yuan, with an increase of 7% year-on-year, contributing significantly to the primary revenue streams. The intelligent hardware revenue was 250 million, down 29.3% year-on-year. Moreover, the revenue from online marketing services reached 340 million yuan, up 113.5% year-on-year. Particularly, the gross profit margins of the three core business lines all increased compared with the previous year, and that of the learning services increased to 67.8% by 3.3% year-on-year.

NetEase Youdao Dictionary’s user usage time in October 2023


Time distribution

Monthly total

usage time

56,164,100 hours


30.34 %


15.93 %


20.38 %


18.13 %


10.15 %

> 30 min

5.07 %

Data Source: MoonFox iApp; Data Collection Period: October 2023. The statistical results only include mini-program data and do not include traffic data from web pages, apps, or quick apps, among others within the WeChat ecosystem. Taking the time period of 0s < X≤30s as an example, it refers to the duration of a user’s single app session that falls within this range.

For the learning services, NetEase Youdao Dictionary has ranked the first tier in the dictionary translation category as users have started to develop habits in using this tool. According to MoonFox iApp data, the ratio of users who utilized the NetEase Youdao Dictionary for over 10 minutes per session exceeded 15.3% in October 2023. In addition, the monthly product usage time in the same period reached 56.164 million hours, far exceeding the industry average.

Currently, the dictionary functions are more like a language learning community than a simple lookup and translation software. First, rich functions on the homepage incorporate a vocabulary book, camera, dialogue translation, and physical pen pairing to cover translation demands in all contexts. Second, the recommendation module on the homepage relies on the UGC mode and provides users with pictures and video content depending on English learning scenarios. This allows users to gain experience similar to short video platforms by clicking the video function. Last, the systematic learning content provides a guarantee for the subscription business model. The platform provides a dictionary and super member subscription services to satisfy the systematic learning and professional translation needs of the users. Meanwhile, foreign journals and paid books can also meet the reading demands of paid English lovers.

In addition to online paid services, Youdao introduced Zi Yue, a large module, Hi Echo, a virtual oral English private teacher, X6 Pro hardware translation products, etc. We believe that the layout in the technology field will be the key to significantly increasing industry influence and driving up revenues for Youdao in the future.

IV. Conclusion: AI Technologies Will Empower All Businesses Amid the Monetization of Games

Overall, NetEase’s entire business exhibited a performance slightly exceeding industry anticipations and a stable growth tendency. We believe games will remain the company’s main development pillar for a very long time, and the multi-game-approval reserve and continuous self-development will ensure the expansion of the game business. Furthermore, the empowerment of AI technologies will gradually extend from games to miscellaneous industrial fields, propelling the company’s business growth and innovation.

Among NetEase’s game reserve, Project Mugen, a hybrid genre game that combines the open-world RPG category, has gone through numerous rounds of testing. Moreover, there are games waiting for approvals, such as Naraka: “Bladepoin,” as well as those with approvals, such as “Legends of the Condor Heroes,” “Mission Zero,” “Where Winds Meet,” etc. The moderately and highly time-intensive games reserved by NetEase are expected to have a centralized launche in the first half of 2024. “Eggy Party” and “Racing Master” will be launched rapidly in major overseas game markets. We expect the company’s overseas revenue will account for an even larger part of its total revenues.

When it comes to AI technologies, the application of AI in “Justice Online” impressed the players with the fun of intelligent NPCS and customized voices. The non-linear story plot allows all types of players to experience different stories with unique characteristics. The AIGC one-click map-switching function in “Eggy Party” also inspired more than 10 million content creators out of players. We believe that NetEase will increase investment in AI talent training in the future, and large models will impact the whole pipeline of game production at a faster pace. Meanwhile, the development of AI technologies will empower NetEase’s all businesses lines on a larger scale and facilitate the development of other non-game industries by combining with emerging technologies such as digital twin. For instance, NetEase Fuxi has begun exploration in industry and other fields. Moreover, AI will further expand the product lines and lead the company’s business growth.

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