NetEase games in 2024 have not been going smoothly.

On the morning of November 8, the widely rumored corruption scandal at NetEase finally came to a conclusion. Several senior executives, including the former heads of the Battle Business Unit, KK Business Unit, and the Interactive Entertainment Channel Distribution Center, have been held accountable. NetEase has always prioritized anti-corruption issues and handled the matter decisively. However, compared to the emphasis on financial issues, the problems with the games themselves have not received the same level of attention and rapid response, especially in terms of player feedback and game experience.

After experiencing a rebound the previous year, the Chinese game market achieved actual sales revenue of 147.267 billion yuan in the first half of the year. To be honest, this is a decent achievement. However, as one of the "twin stars," NetEase encountered two setbacks within six months.

After six years and nearly 1 billion yuan in investment, "Legend of the Condor Heroes" fell off various game charts just three months after its launch and disappeared. "Operation Apocalypse" was even more surprising. A game with over 10 million pre-registrations achieved its best ranking at only 118th on the iOS Best Sellers list. Ultimately, it took only 45 days from the public beta to the announcement of its shutdown on October 14. Perhaps in a fast-paced market environment, underperforming games that do not receive support are doomed to be cut for risk mitigation.

NetEase currently holds about 30% of the domestic game market. However, upon closer inspection, it becomes apparent that the backbone of NetEase games are still a few "evergreen trees." What worries NetEase is that "Egg Party" from the "evergreen trees" is facing operational mistakes and sensitive social issues such as minors making in-game purchases, while the long-term inaction of the official "Inverse Cold" mobile game is constantly eroding players' enthusiasm.

At the same time, however, NetEase is one of only two companies in the internet industry that has successfully revived its business after experiencing significant setbacks, the other being Weibo. Last time, NetEase successfully found a new growth point through its transition to gaming during the dot-com bubble burst, and "Westward Journey Online" successfully saved NetEase from its dire straits.

At the end of last year, the resurgence of "Identity V" gave NetEase confidence. Compared to financial performance, the more significant real-world significance of "Identity V" lies in affirming NetEase's long-term strategy and the quality of NetEase games themselves. Even if "Legend of the Condor Heroes" cannot make a comeback, NetEase still has the foundation and resources to produce the next "hit." Therefore, it is overly hasty to negate the entire NetEase game business based on the current difficulties alone.

01. "The most familiar stranger" lures NetEase into a trap

"MMO games are NetEase's comfort zone," a view widely shared by players before the launch of "Legend of the Condor Heroes."

NetEase may have thought the same. Significant investment combined with the confidence gained from "Inverse Cold" led NetEase to promote "Legend of the Condor Heroes" as "a truly free martial arts open world, the top-tier Jin Yong game," a somewhat arrogant marketing copy. However, in reality, the game's highest ranking of 15th on the iOS Best Sellers list and a 5-star rating on TapTap obviously caught NetEase off guard, to the point where the new head of "Legend of the Condor Heroes" stated on the official public account, "After taking over and understanding this project, I realized the complexity of the issues far exceeded my expectations."

The emergence of "Genshin Impact" showed gamers the possibilities of open-world and gacha mechanics, but the gaming industry has always been a winner-takes-all scenario. Simply copying MiHoYo is undoubtedly like hitting a brick wall. What about combining the open world with "Inverse Cold"? This idea trapped "Legend of the Condor Heroes" in a mindset of wanting it all: focusing on the open world and player experience while also emphasizing multiplayer social interaction; incorporating gacha pairing mechanics while also maintaining the numerical system of MMO games; embracing free martial arts while also adhering to traditional martial arts sects. This led to most people's impression of "Legend of the Condor Heroes" before its release being a martial arts version of "Genshin Impact."

However, "Legend of the Condor Heroes" did not provide a satisfactory answer to how to solve the difficulties of integrating MMO and open-world game modes. The team also did not deeply consider optimization solutions. The chaotic gameplay and unreasonable numerical values eventually led to players' doubts: It's one thing if the gameplay is chaotic and unoriginal, but how come there's no progress in the traditional MMO aspects?

There are no Dragon Balls in real life, and realizing one's "martial arts dream" can only rely on games. However, the extravagant skill effects and "breaking through realms" after successful leveling up in "Legend of the Condor Heroes" immediately gave players a slight shock of cultivating immortality. The cultural scenes of the Southern Song Dynasty, Menghua Record, and mini-lectures within the game do convey the enthusiasm of the production team but clearly miss the mark, deviating from the theme of martial arts. The better the cultural rendering is, the more it resembles a "burden." Essentially, what players need is to "laugh proudly among the rivers and lakes," not "to be reborn and return to the Great Song Dynasty."

Upon entering the game, the resource collection during the early solo exploration phase can be described as dull. Overly abundant baskets, boxes, and treasure chests require players to focus entirely and mechanically collect items, making it easy to lose rhythm if not careful. During NPC missions, players will encounter mini-games scattered throughout the world, some of which are so imbalanced that they are more difficult than NPC missions (nominating the Stone Pillar Mystery). Such high-density content easily traps players into having to grind, making them exhausted after a few hours, much like going to work. It makes one wonder: Am I playing the game, or is the game playing me?

As the game progresses to the mid-to-late stages, players will find that there are not many innovative aspects to the MMO aspects of "Legend of the Condor Heroes." The personal development system in the game, including "five-dimensional values, martial arts grades, martial arts moves, equipment inlay, and refinement," is essentially a traditional MMO system with a "new coat of paint." There are also a handful of innovative content, such as "Sect Courses," whose design philosophy is to restore the real sect experience, similar to attending classes. However, what is ultimately presented to players is extremely hasty content: the sect courses lack guidance and are cluttered and unorganized, and multiplayer cooperation gameplay ends up being solo.

Of course, if "Legend of the Condor Heroes" is the "disappointing crown prince," then "Operation Apocalypse" is the "unfavored illegitimate child." When "Legend of the Condor Heroes" was on the verge of fading, NetEase changed its head and urgently researched the "Legend of the Condor Heroes" 2.0 plan while continuing investment. When "Operation Apocalypse" was on the verge of fading, it was shut down.

But after all, it is a NetEase product, and it is inevitable to sigh at its current state. For a competitive team game, game balance is crucial, but some heroes in "Operation Apocalypse" have severely overpowered skills, affecting the overall win rate of the game.

This year, multiple shooting games such as "Glowfire Strike" and "Seven Days" have been launched consecutively. In a highly competitive market, there are high requirements for product marketing, but much of the extensive pre-launch marketing for "Operation Apocalypse" was "clickbait" that did not effectively convey the core game experience. Coupled with mediocre gameplay, the "failure" of the operation became more predictable.

02. It may be premature to talk about NetEase's lack of succession

It is understandable why NetEase is so "impatient" to seek innovation this year. The fact is that the average lifespan of a hit game is no more than three years. A lack of new projects to follow up on the declining popularity of a hit game can likely lead to a disruption in the company's product lineup, endangering the company's development interests. Even Tencent, the market leader with a 60% market share, has been constantly seeking change in recent years.

In 2022, "Egg Party" emerged, and "What's your Egg Party account number?" once became a greeting among students. Times have changed. By 2024, Egg Party had lost its former glory. The objective law of the decline of hit games, unresolved in-game bugs and community operation issues, and the pressure from "substitute meals" like "Yuan Meng Zhi Xing" have repeatedly impacted Egg Party's status.

According to data released by CICC, from July 2023 to July 2024, the DAU of "Egg Party" dropped by a whopping 56%. Moreover, Egg Party has always faced the problem of a low user-to-revenue ratio. After all, how much can children normally spend?

The popularity of "Egg Party" largely relies on its social attributes. Extending this thinking, when a player quits the game due to the aforementioned issues, their departure may trigger a domino effect. When classmates and friends around them also leave in succession, the remaining "Egg Party" players have no reason to stay.

Unlike "Egg Party," which is driven by social interaction, "Inverse Cold" mobile game, another pillar game of NetEase, initially placed more emphasis on the individual gameplay experience of players during its design. However, in operating "Inverse Cold" mobile game, it neglected a core element of MMO games - the sense of accomplishment players gain through their efforts to obtain equipment.

The ease of obtaining in-game equipment has made the originally precious unique equipment cheap. This "click to get the Dragon Slayer Sword" strategy weakens the dopamine stimulation of players. Ignoring players' efforts ultimately leads to player dissatisfaction and loss, as "something without the soul of an MMO" cannot attract players for long. Ignoring player feedback in game design is undoubtedly a "taboo" in the MMO market.

It is not uncommon to see the arrogance of planners. Players' opinions are mostly ignored. Imbalances in the equipment system and game lag do not seem important to them. The treasure system disrupts the economic system and balance? Not addressed. The depreciation of old rewards and the excessively fast iteration speed harm the interests of mid-level spenders? Unfamiliar. From the data, "Inverse Cold" can still carry a piece of the sky for NetEase. However, from the comments section, the arrogance of the "Inverse Cold" mobile game has already despaired many people.

If the decline of the "Inverse Cold" mobile game represents the backlash from neglecting player feedback and the continuous long-term optimization of the game, then its opposites, "Westward Journey Online" and "Identity V," demonstrate how to bring continuous and stable revenue and second chances to the company.

Since "Westward Journey Online" successfully saved NetEase during the dot-com bubble, long-term operation has become the underlying logic of NetEase games. On the one hand, the long-term operation of large games provides stable revenue for NetEase, with "Westward Journey Online" still "transfusing blood" to NetEase to this day. On the other hand, long-term operation also gives games a second chance to make a comeback.

At the end of 2023, "Identity V" began to become a regular in the top ten best-sellers, but this was already the game's sixth year since its public beta. "Identity V" had been receiving mediocre responses for the previous few years. Its resurgence is partly due to fan creations and partly because the game provides players with a venue to release their emotions. In an increasingly stressful social environment, "Identity V" has become more forgiving and faster-paced in its six years of updates, allowing players to run wild in a tense gaming environment, releasing the pressure from parents, teachers, and clients. It allows them to briefly detach from the harsh reality.

The resurgence of "Identity V" has certain era factors, but ultimately, it is NetEase's long-term operation strategy that supports "Identity V" in waiting for the era most suitable for it. The existence of "Identity V" and the significant investment in "Legend of the Condor Heroes" reflect the continued vitality of NetEase games.

Even if "Legend of the Condor Heroes" cannot become "Identity V" 2.0, NetEase's next game still has the potential to become a hit. Although corruption within the organizational structure is a fact, the thorough investigation of the main departments involved has cleared out negative factors for future game development and distribution, making the prospects for NetEase's next strongly promoted game quite promising.

03. Final thoughts

Currently, the response to new games and the public opinion impact from the corruption scandal seem to have caught NetEase off guard. It indeed needs to consider how to minimize losses while resolving the incident, but it is premature to conclude that NetEase is on the decline.

NetEase's size necessitates stable cash flow, and the life cycle management capabilities demonstrated by "Identity V" undoubtedly give NetEase some confidence. How to enable pillar games like "Inverse Cold" and "Egg Party" to achieve "regular blood transfusions" to NetEase itself may become a core discussion point for NetEase executives in the coming years.

Ultimately, the reputation of a game company largely depends on the quality of its games. According to NetEase's second-quarter financial report, NetEase's R&D investment intensity exceeded 17% in the second quarter. The failure of "Legend of the Condor Heroes" may bring new momentum to NetEase. Now that the organizational structure has been cleaned up, the only thing NetEase needs to consider is how to make a good game.

*The lead image and images in the text are sourced from the internet.