Good day, and welcome to the NetE ase first quarter 2022 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Margaret Shi, IR Director of NetEase. Please go ahead, ma'am.
Thank you, operator. Please note the discussion today will contain forward-looking statements relating to future performance of the company and are intended to qualify for the safe harbor from liability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions, and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and in this discussion. A general discussion of the risk factors that could affect NetEase business and financial results is included in certain filings of the company with the Securities and Exchange Commission, including its annual report on Form 20-F, and the announcements and the filings on the website of Hong Kong Stock Exchange.
The company does not undertake any obligation to update this forward-looking information except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the 2022 first quarter earnings news release issued earlier today. As a reminder, this conference is being recorded. In addition, investor presentation and a webcast replay of this conference call will be available on the NetEase corporate website at ir.netease.com. Joining us today on the call from NetEase senior management is Mr. William Ding, Chief Executive Officer, Mr. Charles Yang, Chief Financial Officer, and other members of the senior management. I will now turn the call over to Charles, who will read the prepared remarks on behalf of William.
Thank you, Margaret, and thank you everyone for participating in today's call. Before we begin, I would like to remind everyone that all percentages are based on RMB. We kicked off 2022 with a solid quarter, advancing each of our business lines, with total revenues coming in at RMB 23.6 billion, up nearly 15% year-over-year, and our net operating profit increased 29% year-over-year to RMB 5.5 billion. Online games revenues were RMB 17.3 billion, growing by 15% year-over-year. Our flagship titles continue to impress with their remarkable longevity and strength. In the first quarter, revenue from Fantasy Westward Journey Online and New Westward Journey Online II continued to grow steadily, demonstrating NetEase core competence in operating franchise IPs over an impressive duration and longevity of about 20 years.
With immersive festive activities and engaging ne w expansion packs during the Chinese New Year period, we are thrilled that these epic games remain as attractive and appealing to the players as ever. We are actively growing many other long-lasting franchises in addition to these legacy titles, keeping our content fresh with years of perseverance and dedicated craftsmanship. Take LifeAfter as an example. Our open world doomsday survival game, first introduced in 2018, continues to lead its category with its distinctive survival gameplay. Since its operation of more than three years ago, we've been frequently rolling out big updates for LifeAfter on an almost quarterly basis, refreshing players' appetites with numerous content updates. In the first quarter, the Spring Festival version of LifeAfter brought the game to the forefront once again on China's iOS top grossing chart.
In terms of newly launched titles, nearly one year since its launch, Naraka: Bladepoint maintains strong engagement levels with fast-paced content updates, including new gameplay, heroes, and weapons. Adding to our regular update schedule, we are prepping for a significant update, including the first new map, to bring new excitement to the whole player community in the second half of this year. Featuring unchained melee combat, Naraka: Bladepoint was a huge breakthrough for us in esports and has become one of the most popular games on live streaming platforms in China. To round out the game's ecosystem, we established a multi-tiered tournament system consisting of scrimmages, regional tournaments, and a world championship catering to different player groups, including the general public, as well as professional teams across different regions.
In January, we concluded the first world championship tournament, the game's highest level of competition, which attracted considerable attention from esports fans worldwide and brought global players an exciting visual feast. We are also seeing growing momentum with Infinite Lagrange. Similar to our original SLG game, Invincible, this next generation SLG title has begun to show healthy, sustainable growth trend in the first quarter. As the game advances, we are steadily gaining more confidence in our ability to extend the success of SLG games to an even broader demographic. In April, we launched Dead by Daylight Mobile in Asia, co-developed with Behaviour and published by us. Dead by Daylight Mobile is the mobile version of the famous asymmetrical battle arena game, bringing players unrivaled asymmetrical competitive experiences on mobile platforms.
Soon after its debut, Dead by Daylight Mobile topped the iOS download chart in both Japan and Thailand with very strong user engagement. In the second half of the year, we plan to bring to the world more exciting titles, which we hope to thrill our growing global community. In particular, we are extremely excited to have Diablo Immortal slated for release on the second of June in most global markets. Last Friday, at our annual Game Day event, we announced that the China launch of Diablo Immortal is now confirmed for June the twenty-third. As one of the gamer community's most anticipated titles this year, Diablo Immortal marks one of the most ambitious game release in the Diablo franchise's 25-year history, and will bring fans and new players an uncompromised AAA gaming experience.
Pre-registration has been exceptional, with more than 35 million people preparing for the battles to come worldwide, including 15 million in China and counting. Diablo Immortal supports both cross-play and cross-progression, allowing global players to join the fight with each other regardless of platform, while being able to seamlessly transition between mobile and PC gameplay. We consider the debut of Diablo Immortal a huge opportunity to show the world, particularly Western gamer community, about NetEase's strong R&D capability. We take a very global view of our online game business, and Diablo Immortal truly embodies the sort of worldwide appeal that we hope to possess. Next in the pipeline, we will be introducing Naraka: Bladepoint on console. The development is well on track, and we are definitely excited about its prospects, and to welcome console players to our global Naraka: Bladepoint community.
Equally exciting is our planned global market launch of Harry Potter: Magic Awakened, which captivated the Chinese market since last September. While we are putting great effort into the global version, we are also simultaneously working intensively to update the game in China, regularly rolling out new cars, costumes, and gameplay to add even more fun. Our rich pipeline goes far beyond these titles, and we continue to initiate new projects on schedule. As usual, we held our 2022 annual game product launch event last Friday on May 20, revealing the latest information about other exciting titles in the pipeline, including the mobile versions of Justice and Naraka: Bladepoint, Eggy Party, a casual game, Roar of War, Vive le Football, and Mission Zero. We encourage you to read through our press release about this event, or watch last Friday's event replay to get more comprehensive information.
In 2022, we have made more solid progress in globalization. We have always been relentless in our drive to invest in and empower our people, and we are incredibly excited to hav e more global talents joining us. After years of strategic planning, we now have a number of first-party overseas studios across Japan and North America. Each of them being led by top industry veterans who are using their creativity to forge their best titles on NetEase platform. For example, our three Japanese studios aim to build great console games for both the Japanese and the global audience. Earlier this month, we also launched our first U.S. studio, Jackalope Games, led by industry veteran Jack Emmert, who has decades of experience in MMO game development.
Our idea is to persistently unleash talent potential by enabling them to focus on core mechanics and storylines with creative autonomy while offering them solid technical support in areas such as coding and art design. Going forward, we hope the world will see more of NetEase relevance on AAA releases in the global market, either through self-development, investment, or publishing. Now turning to our education business. NetEase Youdao achieved a solid and sustainable performance in the first quarter. After disposing of its academic after-school tutoring businesses. With total net revenues of RMB 1.2 billion and growth margin of 53.1%. Smart learning devices remain the key driver of Youdao's future growth. In the first quarter, Youdao continued to extend its technology offering by launching improved content, features and new products.
Net revenues from Youdao smart devices segment reached RMB 253 million, representing an increase of 25% year-over-year. Through partnership with education presses in 11 additional regions, we have added original sounds to the Youdao Listening Pod based on various versions of the English learning textbooks. In early April, we introduced a new product named Youdao Smart Light, which integrates AI learning features into a desk lamp. Powered by our robust AI algorithms, it allows users to schedule a plan before they study, look up meanings and translations of words and sentences in Chinese and English during their study time, and inspect and review their homework after they finish studying. By clicking the screen to conduct research, the device helps students develop more independent learning habits and significantly improves their learning efficiency while protecting their eyes.
Looking towards growth opportunities in the STEAM education sector, we have worked hard to optimize the functions and user experience for different courses. As a result, for example, growth billings from Youdao Chess Class increased over 170% quarter-over-quarter. In addition to content upgrade, we have also built a learning community on the Youdao Board Game Academy app. On this platform, students of Go, chess, and Chinese chess courses can interact and compete with AI or their peers of similar levels in a fun and engaging way. To complete the cycle of learning, testing and grading, Youdao has applied to become an official online testing and certification site for various board game associations in China to make the skill certification process easier for our students.
Looking ahead to the remainder of 2022, Youdao will remain focused on upgrading its diversified portfolio of products and services, and we have confidence in its future development, powered by its sophisticated R&D capabilities and persistent drive to empower education with our technology. With NetEase Cloud Music, we maintain steady momentum in the first quarter. MAU for our online services were 182 million, largely stable both year-over-year and quarter-over-quarter. We also continue to improve our monetization capabilities, growing our net revenues by 39% year-over-year to RMB 1.2 billion, driven by healthy membership growth and robust social entertainment services. Our membership paying ratio reached 20%, compared with 13% in the same period last year.
We made enhancements to our content and introduced more product feature innovations to improve the user experience, which helped us drive paying user growth. Additionally, growth margins more than doubled quarter-over-quarter in the first quarter, reaching over 12% as we continue to optimize our content cost structure. On the new features front, we introduced our innovative Harry Potter Magic Radio, a joint collaboration with NetEase Games team, which allows users and gamers to enjoy Harry Potter-themed podcast content within the game. While we continue to add unique products and capabilities that help redefine our community's music experience, we are also improving our brand awareness and influence with content-oriented and event-driven campaigns. We offer a full spectrum of varied content as the demands of our user base are increasingly diverse and personalized.
By the end of March 2022, our content library consists of more than 90 million music tracks, including music from established labels as well as independent artists. We are attracting independent music talent at a notable rate, and by the end of the first quarter, we had more than 450,000 registered independent artists on our platform. To help independent artists create and promote their music, as well as realize commercial value, we continue to nurture music talent with invaluable tools such as support programs, traffic referrals, fan interactions, and multiple monetization methods. Moving on to Yanxuan. April marked its six-year anniversary. Over the course of the last six years, we have built Yanxuan into an exciting private label consumer lifestyle brand. We have established a strong supply chain system and can accurately profile user preferences with our leading algorithms.
Through diversified channels, Yanxuan has launched a number of popular products such as cat food, bathroom fragrance, and ergonomic chairs. As we move ahead, Yanxuan will continue to focus on pets, home cleaning, bedding, and other categories that we excel in while we continue to launch original design products and bring consumers products that facilitate more chilled and pleasant lifestyle. Above all else, NetEase is always a content company with deep-rooted internet DNA. Our ability to innovate, create, and leverage our proprietary technology forms a cohesive layer across our different business lines, whether it be games, education or music. Within each of these areas of robust content, we are steadfast in our mission. Dedicated to improve our content competitiveness, we will continue to invest and innovate to provide users with excellent products and services full of fun, technology, and surprises.
At the forefront of each of our business lines is our commitment to social responsibility and charitable endeavors. With the recent pandemic cases in China, each of our businesses have utilized their resources to help the community we are serving. In March, NetEase Group distributed 1 million copies of anti-pandemic gift packages to cater to people's entertainment, work, and consumption needs. More recently, leveraging the advantage of our supply chain, Yanxuan mobilized 50 tons of fresh vegetables from our fresh food suppliers for people in COVID-affected Shanghai areas. Additionally, leveraging the power of music as an inspiring and uniting force, we distributed another 5 million Cloud Music VIP memberships for free to the people in Shanghai and Jilin Province, with a goal of using music to comfort and inspire those impacted by the pandemic. This concludes William's comments.
I will now provide a brief review of our 2022 first quarter financial results. Given the limited time on today's call, I will be presenting some abbreviated financial highlights. We encourage you to read through our press release issued earlier today for further details. Total net revenues for the first quarter were RMB 23.6 billion, or $3.7 billion, representing a 15% increase year-over-year. Net revenues from online game services were RMB 17.3 billion, up 15% year-over-year. The additional growth was primarily due to the increased revenue contribution from the launch of new games such as Naraka: Bladepoint and Harry Potter: Magic Awakened. Net revenues from our mobile games accounted for approximately 67% of total games revenue.
Youdao's net revenues were RMB 1.2 billion, compared with RMB 1.3 billion last year same quarter. Youdao discontinued its after-school tutoring services for academic subjects under China's compulsory education system K-9 since the fourth quarter of last year per regulatory requirement. If we exclude discontinued business, Q1's apples-to-apples revenue stayed relatively stable compared with last year. On the other hand, the smart devices business maintained steady growth trajectory, with net revenues up 25% year-over-year. Net revenues from Cloud Music were RMB 2.1 billion, up 39% year-over-year. The increase was primarily due to increased revenues from membership subscription and social entertainment services. Net revenues for innovative businesses and others were RMB 3 billion, up nearly 12% year-over-year due to business development and seasonality impact of various lines.
Our total gross profit margin was 54.5% in the first quarter, up slightly compared with 53.9% in the first quarter of last year. GP margin for our online game services remained stable at 65.1%. As a reminder, this number is generally stable with some narrow fluctuations based on the revenue mix of mobile and PC titles, as well as self-developed and licensed games. GP margin for Youdao was 53.1%, compared with 57.3% in the same period of the last year. The decline was mainly due to the lower revenue proportion from Youdao's learning services, which carry a relatively higher margin.
GP margin for Cloud Music excelled in this quarter, climbing to 12.2% versus 4.1% in the preceding quarter, and a negative margin of 3.1% in the same period last year. The significant margin improvement primarily resulted from strong top line growth as well as improved content cost control. Additionally, this marks our fourth consecutive quarter of positive growth GP margin for Cloud Music. Gross profit margin for innovative businesses and others was 23.3%, flattish compared with 24.1% in the first quarter of last year. Total operating expenses for the first quarter were RMB 7.3 billion, or 31% of our total net revenues. If we look at our costs in more details, our sales and marketing expenses as a percentage of net revenues were 12% compared with 13% last year.
The change was mainly due to less marketing spending related to Youdao. If we exclude Youdao, our selling and marketing expenses as a percentage of net revenue were 11% compared with 10% last year, mainly due to increased spending on certain games promotions in the first quarter. Our R&D expenses were RMB 3.4 billion or 14% as a percentage of net revenues. We remain committed to investing in content creation and product development, which is core to our revenue growth. Other income was RMB 28 million for the first quarter. The quarter-over-quarter and year-over-year decrease resulted from the fact that we had certain publicly traded securities in our current investments, and the prices of such securities declined meaningfully in the first quarter. We are required under U.S. GAAP to reflect these fair value changes.
The effective tax rate was 22% for the first quarter. As a reminder, the effective tax rate is presented on an accrual basis and the tax rates differ from each of our entities depending on the applicable policies and our operational results. Our non-GAAP net income attributable to our shareholders for the first quarter of 2022 totaled RMB 5.1 billion, or $807 million. Non-GAAP basic earnings per ADS was $1.23 or $0.25 per share. Our cash position remains strong. As of the quarter end, our total cash equivalents, current and non-current time deposits and short-term investments balance totaled RMB 107 billion, compared with RMB 103 billion as of the year-end of last year.
In accordance with our latest revised dividend policy, our board of directors have approved a dividend of $0.0644 per share or $0.322 per ADS. Lastly, under our share repurchase program, approximately 20.1 million ADS had been repurchased as of the first quarter end for a total cost of approximately $1.9 billion. Thank you for your attention. We would like now to open the call to your questions. Operator, please go ahead to the Q&A.
Okay. Thank you. If you would like to ask the questions, signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. For the benefit of all participants on today's call, if you wish to ask your questions to management in Mandarin, please immediately repeat your questions in English. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We will take our first questions from the line of Alicia Yap from Citigroup.
Um.
Your line is open. Please go ahead.
Hello. Hi. Yeah, thank you. Can you hear me? Okay.
Hi, Alicia. Yes, Alicia.
Hi, thank you. My question is on your overseas studio. Given you know, your recent establishment of the overseas studio in the U.S. and Japan, could you share some color with us regarding your hiring plans, your games development plans, and also, how you are viewing the overseas talent and, future, games growth and growth outlook? Thank you.
[Speaks in foreign language]
Okay. Thank you . The overseas market and the overseas market development is of utter importance to us. Right now, about 80% of our R&D resources is in C hina. Something between 10%-20% is in overseas market. Going forward, we think that we will probably see a 40%-60% split, having 40% of the R&D resources in overseas markets. We are working very diligently and actively with overseas development teams to co-develop some game content. Internally, we have a plan and we have a clear goal of how we want to achieve the revenue split between overseas markets and the China markets. Hopefully, both the China markets and overseas markets will account for a meaningful portion of our revenues. Thank you.
Thank you.
Okay. We will take our next questi on from the line of Yang Bai from CICC. Your line is open. Please go ahead.
His first question is about the impact of overseas games market, how that would affect our profitability for games business. His second question was in terms of you know in addition to Japanese market, what other regions we're thinking of publishing ourselves.
Okay. So for convenience, I will answer these questions directly in English. When we think of our overseas games increased contribution, obviously we are in a ramp-up phase. As we grow more diversified titles across different geographies, like I mentioned in previous quarters, the margin profile shouldn't be very different between a domestic game and the overseas game in a steady state. Rather it is more correlated to the growth billing.
We are very confident in the next three to five years' time as we continue to expand the scale and presence in the overseas market, when we have multiple hit titles that are universally appealing to the users, those games are going to demonstrate very, very strong and similar margin profiles as what we have been experiencing with some of our very long lasting legacy titles here in China. Now, your second question regarding our publishing capability, as you may have noticed that NetEase remains very determined in major markets such as Japan, and for some titles even in the western market, we strive to learn and control our own publishing capability. That is something we have to gradually build up and learn as we become a truly global game company.
You may have noticed that we've successfully self-published games like Knives Out, Identity V in Japan. We are going to publish Harry Potter: Magic Awakened in Japan. We are globally publishing Lord of the Rings. I think going forward with more content partners, with more IP partners, and with more self-developed or co-developed titles, our global publishing capability, particularly in major markets, will be further strengthened. Operator, next question, please.
Okay. We will take our next question from the line of Jialong Shi from Nomura. Your line is open.
好，谢谢，谢谢管理层接受我的提问。Thanks for taking my question. 我想问一下，就是我们那个一季度游戏的那个递延收入，deferred revenue，那我们看到就是一季度我们这个游戏的递延收入，去掉这个有道的话，那么我们游戏的这个deferred revenue是环比上升了1%，这个还是蛮惊喜的，因为一季度我们都知道网易没有上什么新的游戏，所以我想问一下，就是可不可以跟我们讲一下，就是在一季度有些什么样的因素，使得这个我们游戏的递延收入从上个季度的环比下滑，变成这个季度的这个环比是上升，我想就是说不知道这个就是一季度这个游戏点数这个环比上升，跟这个疫情反弹，玩家在这个游戏上的这个时长增加有没有关系？我自己翻译一下。Your game deferred revenue rose by 1% sequentially in 1Q, even though you did not launch any new titles in first quarter.
Could you give us some color on what were the factors that have contributed to this recovery in your deferred game revenue? Just wonder if this recovery had anything to do with the lockdown?
Thank you, Jialong. I will answer this financial question directly in English. By the way, we rephrase deferred revenue into contract liabilities just to be more precise and accurate under the accounting literature. Yes, as you may have noticed, our contract liabilities increase slightly for games. If you exclude Youdao from that, it's largely attributable to our strong Q1 growth, Q1 performance of PC games. As you may know, Chinese New Year period is typically a seasonality peak for PC games and Fantasy Westward Journey, by the way, after almost two decades of operation, have recorded a new record high quarterly gross billings and quarterly revenue in the first quarter. World of Warcraft also performed fairly strong in the first quarter, contributing to our strong games contract liabilities that's been recorded in the first quarter. That's the main reason. Okay, operator, next question please.
Okay, thank you. We will take our next question from the line of Felix Liu from UBS on the line.
谢谢。管理层晚上好，恭喜我们非常好的第一季度的业绩，也谢谢你们的时间。我有两个问题，一是关于我们这个 Diablo Immortal 的这个 launch，请问管理层是否可以和我们分享一下我们对于这款游戏的用户或者是流水的这个预期，是怎么样一个水平？然后关于海外的这个发行，有哪些市场是由我们网易自己来发行？然后随着这个游戏的成功上线，我们对于接下来和暴雪还有微软的这个中长期的合作有怎样的展望？我的第二个问题是想问关于严选，因为最近我们也是注意到这个疫情对于电商的物流有一些行业性的影响，所以想看看管理层能否分享一下这个对于严选的最新的影响是怎么样的，我们估计恢复的拐点可能在什么时间。Thank you, management, for taking my questions. Let me translate myself. My first question is on Diablo Immortal. Congratulations on the launch!
Could you share any expectations on revenue or user metrics for this game? Which overseas markets will NetEase be responsible for distribution? Any thoughts or color on the long term collaboration with Microsoft and Activision Blizzard post the game launch. My second question is on Yanxuan, more specifically about the COVID-19 impact to the Yanxuan business in the second quarter and potential turning point. Thank you.
Okay, thank you Felix. I answer your question directly in English. First of all, Diablo Immortal, under the partnership agreement, we are a co-developer, so we got a co-developer's share of pie from its global revenue. In terms of publishing, NetEase is responsible for the game's publishing in mainland China, whereby Blizzard is responsible for its publishing in the rest of the world. You may have noticed that we also have very close business partnership with Microsoft because we've been the exclusive partner for Minecraft for multiple years. With the announced acquisition of Activision Blizzard by Microsoft, we are very looking forward to a future strengthened partnership between NetEase and the broad Microsoft franchise, because we are a premium content provider.
They obviously have very excellent first-party studios as well as Xbox distribution platform. There are multiple areas that we can e xplore potential partnership down the road. To your second question on Yanxuan, we will have Yanxuan's CEO Singo to answer your question.
好，谢谢。 你好，我直接回答您的问题啊。网易严选在仓储和物流服务上，在部分疫情的地区确实受到了一定的影响。从三月底开始，我们明显感受到了受疫情影响的地区的订单的整个履约的时效变长了。但好消息是我们从五月份，进入五月份，我们感觉到情况有所好转，而且在持续地恢复中。
In certain regions, we do think that our fulfillment and the logistics system has been impacted somewhat by the pandemic, and since the end of March, the fulfillment time has been a lot longer than before. The good news is that, you know, since May, we've seen a much more meaningful improvement and progress, and we think that progress is still going. Thank you. Opera tor, next question please.
We will take our next question from the line of Lincoln Kong from Goldman Sachs. Your line is open, please go ahead.
好，谢谢管理层 take 我的问题啊。那我的问题呢，是关于这个，我们今年的海外游戏市场的一个展望，和我们这个海外游戏的一个变现的一个策略啊。我们也看到，就是说从四月份我们在日本发了几款游戏嘛，那其实也比较成功，比如说像零秒杀机啊，这个 engagement 其实是很强的，但实际上它对这个，至少短期看它这个流水相对是比较少。我想知道一下，就是说我们在这个海外游戏的这个商业化变现这块，会否是，就是更耐心一些，或者说在它整体的这个游戏的生命周期里面啊，是相对国内游戏可能相对更平均一些的，这个商业化是这样的一个策略吗？那么对我们比如说下半年做哈利波特，海外的发行，日本市场的发行，它也会是类似的一个变现节奏吗？啊，那跟这个相关的，就说我们怎么去看今年的这个海外，尤其是日本市场的一个需求状况。我们也看到很多第三方的数据啊，和这个，全球的一些游戏 player 啊，对今年的这个游戏市场的展望是相对比较保守的，包括 year to date 的一个情况也是比较弱的。所以我们想听听管理层说一下这个对今年整体的这个海外市场的一个情况展望。 Thanks for taking my question. The question is about the overseas game market and our monetization strategy for international games. As we know, there's strong engagement of Dead by Daylight Mobile in Japan, but a relatively small crossing, so we think that those international games' monetization pattern is evenly distributed within their product lifecycle. If so, how should we think about those future high profile international titles in the second half, especially Harry Potter Japan?
Related to that, how do we view the outlook for the Japanese mobile game market this year, especially year-to-date grossing seems to be a little weaker than expected? Thank you.
我回答你这个问题，就是海外的游戏市场跟中国的确不大一样，中国目前绝大多数来自于移动终端的游戏收入会做得比较好。那海外它有主机，有PC，然后是移动。所以我们认为不同平台的游戏和不同终端的游戏，这个收入的结构，就用户群体的结构是肯定会有明显的差异的，在不同的国家也会有巨大的差异，但是这个差异性的存在，对我们来说应该不会是一个巨大的挑战。我相信网易是有能力在短时间内，以各种平台和各种终端的适应性去做出满足不同地区消费群体需要的不同类型的游戏，短期内你不用去顾虑这个事情，我们毕竟是一家做了二十年的公司，这些问题都是能解决的，就这么简单粗暴地答复你这句话。
Yes, it's true that overseas markets are completely different from the China market. In China, majority of the revenue, games revenue come from mobile games, whereas for overseas we have console, we have PC, and we have mobile. The different types of games, there's very different monetization patterns, and for different countries, monetization is different as well. All of that it will shouldn't be a big challenge for NetEase. We have decades of experience in gaming R&D, so we should quickly find a way to satisfy users and players in different countries on different types of devices. Thank you. Next question please.
Okay. We will take our next question from the line of Natalie Wu from Haitong International. Your line is open.
可以，晚上好。 晚上好，谢谢。丁总、Charles 和 Margaret 接受我的问题，也恭喜亮眼的业绩。那我的问题呢，是相关这个疫情的两方面，一方面的话，就海外疫情恢复之后，很多游戏厂商都说遇到了一些游戏的疲软，那不知道咱们有没有这样类似的情况？然后另外一方面的话，国内的最近的一轮疫情封控当中，有没有看到咱们的游戏里头有玩家的时长和消费增加的情况，和二零二零年初的那一轮比一下情况。Thanks, Nelson, for taking my question, and congratulations for a very strong quarter. My question is regarding the pandemic impact on our game busin ess. Just wondering, can you comment on the impact of pandemic opening up in overseas markets on your games business?
Because some of your peers noted that the weakness coming due to that fact, just wondering if you also experienced that kind of the situation. In the meanwhile, in terms of the domestic market, did you see increasing time and value spent on your games during the domestic lockdowns? Thank you.
Hi, Natalie, it's Charles. In the interest of time, let me answer your question directly in English. The COVID situation has been lasting since, it's been more than two years. Frankly speaking, I think everyone is a victim of this COVID situation. Game industry, or broadly speaking, entertainment industry, is probably a little bit more fortunate that we are less severely impacted by the COVID than many of the other businesses. Frankly speaking, we do not observe any weakness from our overseas markets, right now, because we are fairly new and in our early stage of executing our ambitious global strategy. As we continue to launch more games, we feel pretty confident about our growth, particularly in the second half of this year, when many of our exciting, highly anticipated games will be unveiled to the international game audience.
Now, speaking of the domestic market, for the past quarter, Chinese New Year period is, like I said, a strong seasonality for PC games, but we are not seeing really any meaningful so-called enhanced ARPU or time spent on mobile. Mobile stayed relatively, I would say, stable, so you are not really seeing any kind of highs and lows of obvious, seasonalities or one-off implications, caused by the lockdowns. I think, you know, our game development philosophy is fairly consistent and straightforward. We, you know, there's a lot of these macro situations that's beyond anyone's control.
What we could do is that try to observe the shifting, user experience preferences and try to cater to their shifting preferences by diligently and regularly roll out content update through, innovation, through, fresh gameplays, etc. I think that is kind of an open secret we've been adopting and operating for the last two decades, from PC screens to mobile screens, through good economies and bad economies. I think that's something if anything that we have learned from the COVID or from our past two decades of experience is that, you know, remain user-focused and content-focused, then we won't go too wrong off the track. Operator?
Got it.
Maybe we have time for one last question.
Okay, thank you. We will take our next questions from the line of Thomas Chong from Jefferies. Your line is open.
Thanks, management, for taking my questions. May I ask a question about the regulatory environment for the online gaming sector after the resumption of the 版号 approval? Should we expect any new regulations or anything that may be released in the future? On that front, how should we think about outlook for the domestic gaming sector in coming years in terms of the growth momentum? Thank you.
那个，麻烦帮我翻译一下他们的声音嘛，我听得有点辛苦。
好，老板他就是两个问题，一个呢，就是关于政策方面，因为四月份版号重开了，那后面您觉得就是说对于整个游戏行业的政策，有没有什么见解。第二个呢，他也是想关心，就是说未来您觉得中国游戏整个这个行业的增长的前景您怎么看？
中国这个市场游戏的前景我们还是挺乐观的。毕竟游戏这一类的互动娱乐方式是很多年轻人比较喜欢的。那版号，在中国做游戏是需要政府的这个审批的，版号这个问题，那四月份是发了一批，那我坚信政府对游戏的监管的态度，未来还是能够去支持和扶持一些正能量的、寓学于乐的、能帮助年轻人和用户成长的这个作品，这我想是一个监管的初衷吧。所以总体我们还是比较乐观的，比较乐观的。
Thank you, boss. We quite optimistic with the growth of the Chinese gaming market. It's a popular form of entertainment among the younger generation. As you've seen, since April, there's been a batch of new license approvals. I think that going forward, the policy will remains that it supports game content that could be beneficial and educational to the gamers and game players. Thank you. Thank you. Thank you very much. I think that would end our call. Operator. Okay, well-
Okay, thank you.
Thank you once again. Okay.
That concludes today's conference.
Thank you once again.
好，谢谢。
谢谢，谢谢。Thank you once again for joining us today. If you have any further questions, please feel free to contact us directly or TPG Investor Relations. Have a great day. Thank you.
That concludes today's conference. Thank you everyone for your participation.