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NetEase: the importance of partnerships in the global gaming business

Simon Zhu, Head of Strategy, Investment & Globalization, NetEase Games

Margaret Shi, Head of Investor Relations and Global Communications, NetEase, Inc.


Founded in 1997 by CEO William Ding, NetEase has quickly become one of the leading internet technology companies that develops and operates many popular online PC and mobile games in China, Japan and other international markets. As one of the world's largest incubators of quality online game content, NetEase is dedicated to supporting the growth of innovative studios around the globe and growing an international presence along the way. NetEase was an early investor in Devolver and tinyBuild, both of which held successful IPOs on AIM in 2021. Simon Zhu, who heads the Investment, Partnership and Globalization at NetEase Games, discusses the company’s approach to partnerships and investment – and the role of London’s markets in growing global gaming businesses

What have been the main drivers behind the growth of NetEase?

The company started with large-scale email services and an internet portal. In 2001, we began to develop our own video games; the second game we launched – Fantasy Westward Journey Online – remains one of our biggest franchises to this day. In 2008, we initiated a cooperation with Blizzard, which is still in operation today, to publish all their games in the PRC. Around 2012, the company decided to make significant investments in the mobile space, which rapidly made NetEase one of the biggest iOS game developers and publishers in the world.

We are laser focused on innovative, high-quality b2c content. In our world, the consumer is the boss. If consumers are excited to play our games, we know we’ve done something very right and our stakeholders are happy.

How has NetEase built its international presence to date?

Since 2016 we started to work with innovative developers and publishers worldwide; we officially introduced Minecraft in China, which was a big deal. Later, we started to develop international partnerships and make investments in partners such as Devolver and tinyBuild.

Our motivation for going global is not about building market share but about content and creativity. We have to create or publish games that sell themselves because of their unique qualities and high production values. If games are popular in the Japanese and North American markets, they have a good shot at gaining global popularity.

NetEase had been an investor in two games companies - Devolver and tinyBuild - before each of them held IPOs on AIM. Why did you invest in them?

We met Devolver in 2017 and invested in 2018. We were the first and only external investor prior to Devolver’s IPO. Obviously, we share the same passion for games but we were really impressed by the success rate of the games they had published and by their ability to understand a game’s potential at a very early stage. They have a strong brand; developers worldwide want to work with them. As our vision at NetEase is to unleash the potential of developers, we can support a huge additional network through Devolver.

We also met tinyBuild around 2017. They had a very different strategy and approach from Devolver, focusing on fewer but bigger franchises and with a focus on mobile.

As investors, we shared with them our hypotheses about future innovations in the industry. We worked closely with Devolver on one of their biggest project to date – Fall Guys – and supported the company to make acquisitions of significant IP. We worked together on their future strategy; I see Devolver as being a small Electronic Arts (EA) 30 years ago .

Why was the London Stock Exchange the best choice for the IPOs of Devolver and tinyBuild? 

Obviously, in both these cases the management teams of Devolver and tinyBuild made their own decisions about the most appropriate market for their IPOs.

We helped them by conducting some very thorough research and doing a comparison of various exchanges.

AIM can be a great fit for mid-sized, high-growth potential game companies with its simple and transparent process. From our analysis, we found AIM to be super-friendly and supportive for games companies like Devolver and tinyBuild. It provides liquidity, market stability and offers a growing ecosystem.

What are the principal scaling challenges that face gaming companies and how does NetEase support them as a partner? 

We are a developer-centric company so our business model is very different from platform companies. Contrary to platforms where daily user monetization is a key component, we have a single focus – to believe in and support developers and the games they create.

Our approach is bottom-up; give the creatives freedom. Gaming companies always face the challenge of staying relevant; tastes change constantly so a content provider must remain alert and humble and constantly innovative. Innovation creates a better business model; if your game attracts users because of its unique qualities, it lowers your marketing costs.

Our partnerships work both ways: our partners help us in our global expansion and we can provide them exposure to the Asian market through a strong marketing and publishing skill set.

What are your reflections on the strengths of the UK games ecosystem?

The UK has exceptional game development talent. With strong engineering and coding skills, as well as very good taste, it is a very interesting market for us. We are keen to provide talented UK developers with resources to build the games they want to make.

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