Q4 2020 NetEase Inc Earnings Call
Good day and welcome to the net is 2010 default quarter and full year earnings Conference call. Today's conference is being recorded at this time I would like to turn the conference over to Margaret Shipp and.
Direct the off net east let's go ahead ma'am.
Thank you operator.
And the discussion today will contain forward looking statements.
Moving to future performance of our company and that income.
And just to qualify from a baseball Brooklyn liability established by the U S E T V.
Did you guys from format.
Such statements are not guarantees of future performance.
And Oh God.
Moving on.
The other factor.
From a book.
And a couple of control and could cause actual results to differ materially from those mentioned in today's press release and the discussion.
General discussion of the risk factors.
And so.
And this result is included and important pilot holiday with the Securities and Exchange Commission, including its annual report on form 20-F and <unk>.
And then from the filing of a website and Pogo book sales.
Company does not undertake and obligation to update forward looking information, except as required by law.
That's cool.
Certain non-GAAP financial measures comparison purposes, only and a definition of non-GAAP financial measures and a reconciliation of GAAP and non-GAAP financial results. Please see the <unk>.
And 2024th quarter and full year earnings news release issued earlier today.
And that's been Linda Congress. If you recall did in addition, and then that's a presentation and a webcast replay of this conference call will be available and that the coker website at IR E arc com.
And yesterday on the call from Lucky Senior management, Mr. William Ding, Our Chief Executive Officer, and Mr. Charles Young our Chief Financial Officer, 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 them and be.
We closed the coupon and the quantity we just saw.
As a result in the fourth quarter.
And at the wrong content creation and user experience each of our key business segments showed impressive resilience and.
And deliver sustainable growth.
And the year with.
We generated total net revenue of RMB $73 7 billion for the whole year.
All percentage year over year, and RMB, 19, 8 billion and Max revenues for the fourth quarter.
26% year over year.
2020, and was a challenging year for many businesses around the world. It was not as high as two stand alone and so by the time to work together and thrive.
While I'm, calling and dictionary has been cleared for wood lockdown as the water per year. We believe the wood breakthrough also defined the life and Korea of management and the past year.
We are grateful for the initiatives our employees Inc.
To care for the impact day to respond quickly and act responsibly to help both of our economy and the broader community overcome these hurdles.
And doing so we are proud to have weapons the obstacles growing each of our businesses and the meaningful way supporting our business partners to stay safe and strong and generating sustainable returns to our stakeholders.
We are also proud to have achieved a few milestones in 2000 and quantity as we celebrated our <unk> anniversary from NASDAQ and <unk>.
Felicia our listing on the Hong Kong stock exchange and we.
We are delighted to have seen a positive reaction from the market, especially after our dual listing in Hong Kong and <unk>.
Market that is closer to our room.
Turning to our Q4 results.
And the quarter the popularity of our online games business.
With steady performances from our existing titles.
Net revenues from our online games and services were up 15% year over year, reaching 13 4 billion RMB.
Our legacy titles, such as fantasy westward journey and westward journey online theory.
And so rapidly and we play out.
And okay online and new Westwood.
Jeremy I'll like to once again reached record revenue in 2000 and tightly further strengthening their position.
And the China's biggest MMO titles.
On the mobile side during various plastic celebration and establish a mobile game and I feel WJ mobile game. Once again reached the number one and number two position, respectively, and China's Io assets Games' top grossing chart.
Other games launched in more recent years are also enjoying and impressive play your traction with highly active call user basis or.
I'm, Paul life after and <unk>.
Paul.
Following its launch in 2018 life after has become and iconic title.
Thanks, and reaching its initial phase and stabilization in 2019 growth billions of life after regaining its growth momentum and to abandon quantity as we launched a couple of highly popular expansion packs a day.
A series of new themes and innovative gameplay.
Similarly, our <unk> HIFU Invincible remain steady in 2020 with strong user engagement and its own right amid increasing competitive marketing spend.
Celebrating its fifth anniversary in October and.
Invincible and once again reached the number five position on China's iOS top game growth and China.
Based on EOG, one of our flagship titles.
Our IP strategy has paved a smooth road book, creating various IP base pen and paper.
Pigment production.
As of today, Yeah estimated value of <unk>, Inc.
The U S dollar terms idiot according to <unk> research.
Since its initial blockbuster launch in 2016, we have been seamlessly growing this important IP.
We've introduced three EOG spinoff game and mobile card and simulation genre, we have two more new spin up games and amazing project growth.
P G game and.
EOG, Idaho project another stimulation day.
On the overseas from we continue to make solid progress for the <unk>.
<unk> four consecutive years revenue contribution from overseas market has been growing and continuously as a proportion of our overall games revenue from.
The key drivers include titles, such as my Salt life optics, and identify all of which had a record and yeah in 2000 and the country.
Japan is a key hub for the global games industry, we deeply value of these creative mine and our success in Japan has allowed us to work more closely with local partners and.
Initial momentum in this arena include how established collaboration with the Pokemon company and the theory of IP collaborations between knives out and other famous IP, such as E block and attack on hyphen.
We have also been more active attracting and collaborating with local Japanese R&D talent complementary to our own as well as opened up our own of course studio, which focuses on building next generation console game.
And one is a super exciting year for us with a number of Shanghai It holds ready for launch.
Starting this year with revelation mobile game.
Long anticipated mobile adaptation of it the PC version.
Captured and both returning fans and brand new and then more players, including a large group of E Mail and younger player Revelation mobile game quickly became a top ranking title on China's iOS grossing chart following its launch. Additionally.
Additionally in January we brought to market you'll deal dual Inc. A comparative cockayne amo out.
Calling on the nostalgia of a generation of new deal fans.
Mobile games and pop and China's iOS download chart soon after its launch catering to the local preference we optimize the range of items for the Chinese market.
<unk>, a new mode and select new design, which are proving quite popular amongst our player.
Harry pocket and the magical awaken.
And that's another game that has been long anticipated our player community we.
And we hope to half reported into making this game will do it suggested that this global IP come in.
Featuring a blend of strategy RPG element.
Players will become a hardwood freshmen.
And this diversified with our partners and then spells day magic knowledge and experience Amazing Wizardry lives.
We will also be bringing our next generation S algae title infinitely grunge and a lot of the reason rise to wall to players around the Globe Inc.
And from there to the ground space themed.
<unk> S L G.
<unk> can explore unchartered galaxy command and build space crop.
Involved themselves and strategic backhaul and plan and the development of their old space station.
A lot of a rate rise to wall is based on the famous and trilogy sack and a multilayer fantasy world.
And will recreate a visually stunning and completely faithful rendition.
Iconic characters and locations from the original masterpiece.
These two games and we look forward to extending our success and S. L. G from China to overseas market, where we see greater potential for this thought provoking genre and.
In addition, we had a handful of other exciting titles and our pipeline all have received license approval in China.
These include Alice Yang of legend night and day a breaker.
<unk> World Chronicle, Diablo immortal and talking about class.
As we further enriched our game portfolio, we have and gradually broadening our skill sets and different areas.
Our R&D team.
Clearly over the past few years.
Our sophisticated R&D infrastructure.
He was a centric corporate culture and.
Passion for game attract all kinds of pilot join us from both China and overseas.
We believe our teams are history, and dry will bring to life, even more great titles across diverse strong growth.
Spending our success beyond our MMO RPG route and newer successes and RPG and LG and so on.
We are relentless and our drive to and back pain and empower our people. This.
And this year, we will once again the proud recipient of the ATB axle and hold proxies the wall and.
One of the most recognized the walls and the global talent development and industry.
<unk> reached the creativity of our young produce it and the more we are working to further reform our games project initiation and review and the cognizant to encourage more innovative ideas and gift.
Young produces more autonomy to bring their vision to fruition.
In summary, 2020 has been a strong year for our online games business and.
The industry. Despite a high base, we are excited to see what 2021 will bring.
We look forward to introducing more titles to our users in the coming year and China and globally.
Turning on to our education business.
Has witnessed the tremendous growth potential of China's online education industry over the past year.
Faced with an influx of need across the country, we feel more responsible than ever to ensure our students receive the best quality teaching and most effective learning possible.
You'll now close to the year, we had an impressive quarter.
Total net revenue for you with Dol and the fourth quarter were RMB, one 1 billion, representing a 170% increase year over year.
Growth billions from you without online courses in fourth quarter increased by 223% year over year to RMB, one 1 billion driven by rapid growth across each segment.
Growth from our K 12, and secondly continue to lead the way, reaching a record RMB 767 million and gross billion up 355% year over year with K 12 paid enrollment and expanding to over 659000.
Spice intense market wide competition for user acquisition during the summer you'll dollars advertising strategy promoting healthy resolved and with all I'm sure that we made sure that our unit economics and marketing spend were positive and our advertising content was conducted responsibly for all.
Users and our investors and.
The fourth quarter, which we achieved another quarter of positive operating cash flow of RMB $129 million.
To meet our growth needs and ensure our teaching policy, we continue to expand our high quality servicing team.
Which now comprises 240 and constructed and over 3007 hundred Q2.
Learning devices is another component of your dollars that gives us a competitive assets with a mission to make led and more efficient.
This has proven to be very popular among users generating total net revenues from lending product of RMB $237 million in the fourth quarter, a significant increase of 254% year over year.
In December we released our new Dictionary Pen 3.0, which features two exclusive new experiences the path and chat function and the interactive reading function.
Through the support of advanced AI technology, and cooperation with multiple ophthalmic Fisher.
And houses it keeps learning options fresh and progressive.
Moving through 2021, we will continue in this thing and the vast and content offerings and technology to bring our students optimal learning experiences and realized sustainable growth with compelling smart education products and services and February your salary.
<unk> U S $232 million through a follow on offering.
We are determined to extend your competitive edge in this highly promising intelligence learning segment in China.
Now to our music capabilities.
And that he's calls and music has been and operation since 2013.
Based on our passion for music and our understanding of music lovers, and we created a unique product and community to give our users and unprecedented music experience seven.
Seven years later, we now have more than 200000 independent musician and over 800 million registered users while over 90% of them are pulse 19, I E. The younger.
And our newly launched version 8.0, we focus on bringing our young users elevate your criticism ally's experiences to express themselves. They would extend the playlist and mobile capabilities through videos and podcasts and offers new karaoke functions and yeah.
On the content side, we have witnessed some important changes and the industry for the first time, we reached at Iraq non exclusive agreement with you LNG under the New agreement framework, we can give our users wider range of benefits and choices.
We put it and wished our content library during the year, reaching agreements with studio Ghibli rock record and BMG.
Others.
Most importantly, we continued our athletes to investing and cultivate independent musician in 2020, approximately 1 million. Our original soundtrack music tracks well uploaded to our platform and the total play time of all the music tracks on our platform.
Exceeded 300 billion.
And one of China's most influential music streaming platform for original music, we continue to empower independent musicians.
And then the tool and to argue to help them create more hit songs.
In terms of monetization, we have been stepping up and that's it seems 2019 and continues its journey in last year as a result during the year, we saw strong growth and all three falls membership live broadcasting and advertising.
And our somewhat fixed cost structure, we continue to see improvement and margin actually further scale up the music business.
And yes, we have firmly established its position and our private label consumer brand.
Targeting young professionals, who are looking for trendy high quality and at the same time affordable living.
Centered around this notion we have increasingly build up our brand recognition among these talking to consume that.
We are developing products that revolve around their need, particularly and household products and personal care food and pet supplies.
During the year, we launched a number of super popular products with annual sales exceeding 100 million RMB.
And as product popularity furthers, our confidence and our design capabilities and understanding of the user needs.
With the right content and product offerings.
We're able to attract and increasing number of membership subscriptions in 2000 and countries.
One of our main focus is moving forward is to continue improving the benefit shopping experience we offer to these loyal customers.
All in all despite the difficulties to load have faced in 2020, we are grateful to have achieved continued growth and our standing strong and the new year.
We used our solid ground with gains across our.
Online games online education online music and E. Commerce businesses, we are poised to build on this growth in 2000 and punchy one.
And our focus on content creation, and elevating users' experiences and that these products and services remains at our call and we continue to innovate diversify and expand our reach to generate value for our users and and back to the communities.
Concludes William's comment.
I will now provide a brief overview of our 2000 and plenty full year and fourth 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 more details.
Total net revenue for the year were RMB $73 7 billion.
And I call. It 11, 3 billion, representing a 24 per cent increase year over year Matt.
Net revenue for the fourth quarter, and $19 8 billion or U S dollars 3 billion, representing a 26% increase year over year.
So Tucson and plenty our net revenues from online game services, what renminbi $54 6 billion up 18% from 2019, and RMB 13, 4 billion for the fourth quarter up 15% year over year E.
Year over year increases were primarily due to the increased revenue contribution from fantasy westward journey H, five psi life off too and invincible as well as PC client games, such as fantasy westward journey online in the fourth quarter.
And that's the revenues from our mobile games accounted for approximately $72 four per cent of mass revenues from online game and the fourth quarter.
Yeah without net revenues reached RMB, three 2 billion for 200 and funky.
143% year over year on a quarterly basis net revenue increased 170 per cent to RMB, one 1 billion in the fourth quarter driven by fast growth of both you and all online classes and sales of intelligent learning devices.
Net revenues from innovative businesses and other RMB 15, 9 billion for the full year.
So as per year over year.
And up 41% year over year, and the fourth quarter to reach RMB five 3 billion.
And is mainly due to the increased contribution from net he's called music and that is cc live streaming and inkjet.
Our total gross profit margin in the fourth quarter was 52% with a breakdown as follows.
GP margin for our online games and services was $63 one per se as a reminder, this.
And generally stable with some narrow fluctuation based on the revenue mix from mobile and PC as well as self developed and licensed games.
Gross margin for yourselves for the fourth quarter was 47 five per cent compared to 29, 8% and the same period of last year.
Significant growth was primarily attributable to improved economies of scale.
<unk> optimization of our faculty compensation structure.
Gross profit margin for innovative businesses, and others with 18 percentage compared with 26% and the.
The fourth quarter of 2019, while the margin for Netease cloud music and the NCI have improved year over year. The impact was offset by the decrease in GP margin from that East Cc live streaming which cover a longer period of the annual celebration event, and 200 and Pompey compares and waste.
And in 19.
Additionally, gross profit margin of innovative businesses and others also fluctuate based on the revenue mix of this line item for.
For the fourth quarter total operating expenses were RMB six $9 billion 35 per cent of the total revenue.
Our selling and marketing expenses as a percentage of revenue was 15, 6% down from $18 five depending the prior quarter.
The quarter over quarter decrease was mainly due to lower marketing costs related to you at all.
Excluding the Dol, our selling and marketing expenses as a percentage of net revenues were 12, 2% compared with 12, 9% in the prior quarter, which is relatively stable.
R&D expenses were RMB 3 billion up 9% from the previous quarter.
We remain committed to investing in content creation and product development, which is core to our future revenue growth.
And the full year basis, R&D expenses as a percentage of full year net revenue were $14 one per cent compared with 14, 2% in 2019.
Other income loss was RMB, one 5 billion for the fourth quarter, which included amassing vast meant a loss of RMB 272 million and the Max Foreign exchange loss of RMB, One 8 billion due to the U S. Dollar exchange rate continued depreciation against the RMB.
The net investment loss and the net FX loss.
Mainly book loss in nature, and most of them did not impact our cash flow on.
On a full year basis total net foreign exchange loss for 2020 were RMB, three 1 billion compared with a net gain of RMB $25 million in 2019 E.
The tax rate was 37, 2% for the fourth quarter and $19 eight per cent for the full year of two and in country.
The effective tax rate represents certain estimates by the company regarding the tax obligations and benefits applicable to it and each quarter.
Non-GAAP net income from continuing operation attributable to our share for this for the fourth quarter of 2020 totaled RMB, one 6 billion or U S dollar $244 9 million.
Our non-GAAP diluted earnings per EPS from continuing operations was RMB two three for all U S. Dollar Euro climbed three six for the fourth quarter of 200 and time.
We would also like to point out with the rapid growth of the hotel it is having and much more material impact on our net east group financials for 2000, and Funky you'll now generated total revenue of $3 1 billion RMB and a non-GAAP net loss attributable to <unk> shareholders of one <unk>.
7 billion RMB compared with net revenue of $1 3 billion R&D and non-GAAP net loss of 612 million RMB, Inc. 2019.
Our cash position remains strong as of end of 2020, our total cash and cash equivalents.
Current and non current time deposits and short term investment balance totaled RMB 101 billion.
Kid with RMB $74 4 billion as of the end of 2019.
In accordance with our dividend policy. We are pleased to report that our board of directors has approved a dividend of U S. Dollars 0.012 per share all U S dollar and Euro blind zero six push ABS as a reminder, we changed our ABS ratio October from one eight.
For every 25 ordinary shares to one ads wherever five ordinary shares and finally under our current share repurchase program for up to $2 billion as of December 31st 2000, and clunky approximately $21 1 million have been repurchased under this program.
For a total cost of U S dollar $1 6 billion.
On February 25th 221, our board announced the approval of a new share repurchase program for up to USD. Two 2 billion of our outstanding E. D S and ordinary shares for the next 24 months beginning on March 2nd 200, and Hunter one.
Thank you for your attention we would like now to open the call for your question operator, let's go to the Q&A session.
Thank you if you would like to ask a question. Please signal by pressing star White and I got a telephone keypad. If you are using a speaker phone. Please make sure your mute finally changed and after a lot you'll see net to reach our.
Our equipment.
The benefit of all participants on today's call. If you wish to ask questions to management and mentoring pizza.
Your question is in English.
One question is price.
If you would like to ask more questions.
He has joined the queue by pressing and style, but again they are possible just a momentum if you want and opportunity to signal for questions.
We will take our first question from don't lie off gathering and see from Nomura.
Good evening and a lot of things.
Thanks.
Thanks Sam.
Good evening and management same store and taking my question and let me ask my question and France in Chinese.
And that machine and it's useful to you and Oh and like the one day, so claim and you take a take a decent amount and it should only O N E solution and when you say I just don't want you Angela and but not the national Geospatial rule and I believe you do Samsung Chita bone quoted some of them and <unk> and Russia and your own shown here and I think so we'll try and be a Doug I should wash all.
How do you trade off and do you guys still rule more chance and champion Jameson and it is a luxury and artisanal Sean Finn from beat me a donation to wash all omen Tomatoes, and signing it teams and Dol to share you will know on EBIT.
You've shown and say huh.
And do something under your own intellectual Tucson and.
Chamberlain, Michigan and the fact that.
And I'd say, a time and you don't you and John D E.
Take a Sunday lunch and dinner Youll seasonal Sunshine and I wish on LG and shall I just don't want E mail can do something that they go and all that should also total and seasoned guanase pseudo triangle showrooms and try and take the time and.
And we will mail God. She is on the La Lucha and Jacob syndrome, and team times, and then somebody and what would be if I E.
How much of how much of a netease enjoy a version of mobile game revenue is contributed by third Party third party App stores for this part of revenue what is the average and revenue share charged by third party enjoy channels.
And from media one of net is online gaming peers was trying to negotiate for lower revenue share paid to desktop Hardy.
Stores, just wonder if net east has also started to talk with your channel partners about that about this revenue share and.
And if you did how how how how the how it how how's the progress so far.
But.
And so the full quarter and for the Philips and suggested here.
Good day.
That because it was not.
Well I E.
What should we we should address it and so it says to the launch.
So what are the.
Okay.
We'll share it to go close from the solar assets, which you had called out.
E.
People have weighted.
Uh huh.
That was Australia.
Well, Michelle as a whole.
Hi, there.
Uh huh.
Yeah.
And then of course and ship it.
She said she.
And then what.
Should that stood out and necessity and labour rule of law.
And so I got from Baton Rouge.
So it has a place and what either.
Well, Mr Hua Lei.
And then go.
Sure.
Total, which is always a check holder.
Yeah.
And also helped us lighting and the time of her itself, probably arguably the highest revenue sharing ratio among all the markets around the world up to the high 50% I can share.
And a few of our net keep guns enjoys a more favorable sharing around that give a sense such as at the BK and.
So we think you know that what they lay with me in China right now is all healthy and that's probably unsustainable and because it's about 20% higher than how much one.
Charging and the contact provided and.
With that we'd like to see them and their Chinese and still partners to be E.
And in sync with our international with the international kits and.
Due to the charging and the content providers and more reasonable rate and we want to work closely with our channel partners to create a healthy environment and for the gaming industry.
And download to supplement I E.
Your earlier part of the question and our channel split on a ballpark roughly half of our gaming revenues were generated through I O S, which again is only very very few game content providers and China to have such a high percentage.
<unk> from ILS channels.
Definitely one third coming from Android channels, and the remainder coming from our official channels and that's the ballpark split of the.
China and Blake.
Thanks for the color.
Okay.
Thank you, Okay, operator, and the next question please.
Okay, we'll take our next question from the line of Alex <unk> from Morgan Stanley.
The life and I'll bet. Please go ahead.
Oh, It's just Inc.
And you don't tell us and Margaret seen at all.
Eagle once you Glenn you, you'll sort of true high, though and you go tell the without a junior and there's a whole lot E. The Glen E G.
I realize standout wouldn't you say, Jim Chirico highlight of solar and create that I'll buy it and she science and you sounded sandy.
And so.
And do you think what you can see the whole highlight of serco soil zone saw assuming share and Doug you've got off with adults.
Junior and adding on India and in core C&I, Yes about C U E HIFU, that's and job.
So you sell to and galleries.
Since I took a city and tongue and cheek a highlighter. So that's done and be quite liquidity ladder comes out and so you go back and just I see a whole day that you'd be jade.
So the true hydro you, it's hard to say that you won't do those C versus sugar and do that Youll see a lean mindset and Mackay.
Yeah, and Shin with Honda and <unk>.
I mean, when you and Pfizer Toyota told us from manual Quibble here. He said were younger and go and eight this year.
I'll try and sleep myself.
Back in 2019, we head of revenue target overseas revenue target of 30% and it's following three to five years and because of COVID-19, the growth, especially outside of China has.
Accelerated a lot.
And so I'm wondering if there's any change to this target revenue mix target would it come earlier than expected and then secondly, as I would hope to get some thoughts around our casual games versus hardcore games outside of China, and what are what day, which.
Which one do you think it would be better to achieve the growth and the rois compared with the China market. Thank you.
Uh huh.
Oh Oh.
Oh sure so Chris and I was totally out yet.
No.
Hello.
Hello, she partially.
Julia how people with her.
And we could see a book or would you go a lot louder and push it goes out and Hello, Krish I'll sit huh.
Sure.
So the Saudi and Russia culturally.
And because I'm pretty well and that's something important for that piece of income net of internalization.
And number of games, such as Harry Potter and instead of making a grunge and we'd have to pay.
And typically launch deal again and would hope to see results from their phone.
Okay.
That's right.
Yeah.
And Alex on your second question second part of the question our strategy of thinking of Oh.
Overseas.
And introduction, we are not backing off our feature on one or two genres, but rather we think with our stronger and getting more diversified R&D capability, we want to see multiple and genres of games being introduced to a different geography.
Fees and different users so.
Shooting game like knives out its been proven successful in Japan.
Oh Gee games like Ah infinitely Brahms and.
La Arena, we are confident that we can leverage our domestic success and could even international market as well as games like Harry Potter, which is a more casual card RPG game and others. So I think what we want to do is to have multiple genres and targeting mouth.
And Paul a geography and catering to multiple user needs and that is our overall direction for internationalization.
Thank you Eric.
Next question.
Well take our next question from the line of L E.
Yeah, Yeah from C T.
Hi, and thank you.
Hi, yes, thank you gwennie trend volume not the child's MACRA and how how I think and simple a wash and when you schedule sure woman, a Jewish you're planning to and remember now and Sunshine and Central Charlene E took a E E C.
Say quiet Jin Jiang from sounds good and Qi Dong that you're taking so people who saw a E trade.
And we couldn't do others shooting Lei, Cleveland shoulder and Jonathan tweet, though not sure. They can't go out and how do you see Kiwi and what they should triple what does that support or they would send out and I couldn't quite a and a hole and you go to that one teacher. She is taking like E check off she should they need and any beta jump out at you guys.
NATO and he'd like to hold cash.
Why don't you turned on and Sunshine and shopping holiday Sandy or juices sure sure Bush and uncle and think well now that you've got tonka and alcohol and I've always wanted and so I think one all day Gibson, South and I'll tell you don't have a Nike Inc.
And not that you get sent out from accounts, what's the E. Yeah. Thank you management for taking my questions. My questions is related to the overall growth driver for the cloud music for 2021, where that growth, mainly driven by the subscription revenue ramp or.
To be driven by that.
Online advertising revenue or even the live streaming and could be growing faster and then a small relate the questions on the 1 billion video content investment initiatives recently put management share the rationale behind and do you expect these initiatives to actually revise.
Online advertising revenue or even Florida pushed our net E media business growth. Thank you.
Ooh I E.
Yeah.
And a total growth.
And you should leave it cash a bolt on.
And should I suppose.
Later sales of food.
Hmm and who say well.
And I spoke with food and household judge.
And the good legal and the gesture Boku foods.
So you should Oh.
Sure you know who that is so crazy price.
We're excited about Toyota and you go Wow.
And the later.
Just two.
Just to just so we're moving.
There's a lot of Hugo boss and flush out.
And I think that Brazil.
So English is a kindergarten glut.
There's a tight Louis E.
Okay.
Hello.
Yeah.
Really though.
So that's the overall message issued a.
Sheffield growth.
Sure.
The legal.
Beautiful.
T O.
Yes, yes, so without.
Hi.
C.
They hit US just with you and hot or cool because it works and that.
That's all a lot of free time to sort of look with quite weird huh.
So for sure.
Sure Glenn.
The polls and tool.
But I still feel from.
Women that closer to a full life cycle from here.
It is a process.
And so.
Oh.
You can see that.
Cool.
But it's all yours.
And we should have told us.
Sure cause so hall.
Installation and Glenda.
So that's true what you say.
Sheila who have done it yet.
I'll leave it just Hulu.
And this whole cheerios, because if I share that.
Total since you would've thought.
Just really the 60.
You go to school.
And the whaler.
Cause I assume.
Total Felicia.
So just to tell you when we have covered all that you'll see the truth.
And.
So we'll find out.
Well, it's huge and field.
Yeah, well, so I'm Peter.
And some of them.
Ooh and Ah you fine quarter.
And <unk>.
Just a gesture of goodwill because he knew it sounds like that.
Bruce.
So the physical world.
Sure.
It's all about shipping day.
Oh.
Yes.
Yeah, Oh, how Pennsylvania, Inc, and Alicia Youre right and all of the three main from.
Monetization from music disaster.
Membership advertising and livestream and and one of the key focuses for music and going forward will continue to be about and creating our own content are helping them and depend musicians to create original content on our platform. So in that sense and membership and what that's meant to be one of the E drive it lower.
And monetization.
Our income and income yeah.
And with no kids is that you know music and without listening, but what we've noticed and industry and trying to and of course Nate is that you know keep your consumers' habits have evolved sponsors and listening to and you're watching and.
And is why short form video platform and have become extremely popular Inc.
Yes, and so when we when we think about making a short to mid <unk>.
Video, we want to leverage our existing know how for example, the interest and making sure to make full video centered out of the game are centered around knowledge.
So we have this I actually have one project.
And what do you like E court and asking and.
Information about Oh, Wow and physical.
And so we during the outages during the twice a week, we realized and.
And we noticed that led up to the play time and our videos have actually increased one to two times and <unk>.
And Pat previously so going forward and we'll continue to work hard and creating content a short to medium and lead from video content E and.
Centered around our keep businesses games music and etcetera.
Yes.
Thank you.
That's really shut and next question. Please.
We will take our next question is from the line of Alex Yao from J P. Morgan.
Your line is open. Please go ahead and.
Uh huh.
And I went all coming from make a wish and when you go Quentin you wish Youtube and.
Sure sure.
Michelle Mackay and Tunecore sensors and transfer or a P. C. Do you wish you sure Tom.
And the bulk of womens E G shootout.
Tommy and that's seen wish you and yours.
And sorry and towards them.
TCE when she said she was she choose or high school and that.
Sure.
And I think each year and P. C U E G.
And rich and Gwen and 10 times and sounds like you won't you be and then she'll come back. So we've had a week from excuse me on one thing and so.
So my question and sorry regarding your view on the PC gaming market.
How do we think about the future on the market in both domestic China market and smell the rest of the World and then how do you position yourself in such industries, who used to allocate new R&D resource in the PC gaming development or you just wanted to strategically maintained.
And PC portfolio. Thank you.
Okay.
I'll do it very well.
And I saw the polymer I should say sometime soon.
And the P. P O.
You and John Bakewell.
And industrial single price it actually.
Good day.
Sure.
Hopefully that zone.
And Oh.
And I suppose about weighted tissue.
So stupid that you should go through those.
Sure.
Thanks Cai.
Net.
Jamie you shy and tissue that was just shoot up your dealership alcohol and.
So yeah.
Got you to us on the fleet size and scale for that.
You don't want to just see each time.
Okay, and I couldn't go to others.
And as soon as she is still stable.
Got it.
Yes.
And the doors.
Okay.
Yes.
And some potential out at us and you're right you're right.
And as gene said yet.
You bet.
But is that neither E V O E.
Good day.
And just go south and it goes into Chipotle and that's about it.
But one of them, but they also do.
Carla So coatesville mill G E.
And we'll deal with you and cause you a PC Yoshi book on Chrome and the Coca Cola and policies.
From the day she says.
And Josh philosophy as well.
And this is I'm sure.
Sure.
And so what you see it either.
She says.
Ooh Ooh political and trade from Florida.
She says she does it go.
And the illegal.
Sure.
And whereas this these households should.
She says she saw and are resolved.
And departure, you and how much younger so he or she says she is a lunch of Louisiana.
And they also come from and then William and Japan.
And that they demand from life, and 95 actually and titles I E.
And that he does.
And it sounds like that we would do care very much about P C because and unique specification and.
And the PC games.
Uh huh.
Is that right.
You'll be hearing and.
That PC game, PC games, and deliver to our and gamers.
Well probably continue down this road so on one hand and will continue to maintain our existing titles on PC and and we'll continue to develop our new PD kind of too and May are we actually going to launch and a day call. It 19 that breakup talks.
And I talked to Don.
Total net.
Which I actually I E. The delight them and that's it.
Good day.
And against it.
Good day, and also by the middle of the year, well, we're going to create a work and his team.
Somebody going to lunch and other P D day.
Yeah, No I'll call and Blake plate and good day and competitors.
Uh huh.
And it made them by the food and they center and.
A window wants to add that you know in addition to ourselves so that the day, we actually bought a lot of tests and the very very popular pieces and Oh from places that you had.
Overwatch with Walcott Tulsa and to name a few so we'd probably have the richest collection of pieces Inc.
And in China, and say Peaky and will continue to be are important and part of how things strategy I E.
Next question please.
Our next question comes from line of Thomas Chong from Jefferies.
And I saw that.
Yeah.
Well I said why don't you talk a lot of cash or the to you and would've been T E C.
And.
And when you sell agile should die down.
And Oh tissue Jewish.
And nobody else has on the E.
Oh M&A.
And the job quite level.
And I apologize I should have woman zone K wall.
All our GDN.
E E.
True.
Uh huh.
And why they're so Lula took a D E E.
And that's definitely quite a change that was step one and Chung sociable and Jim O'connor Sandy right.
Uh huh.
<unk> Joshi, yet well see before.
Jeff.
And so for me and that Oh boy or something more kind of order management and for taking my questions and the first question is regarding the overseas game operations.
Consider accelerating the pace.
Food and the use of M&A or in House development and then my follow up question.
All of which the regulations.
Management share about the thoughts regarding the regulatory environment in the online games and live streaming and music. Thank you.
Right away so from a closeout pardon me and I will Miss dearly on countries.
On the issue of I'll put I'll highlight should.
Yeah.
Uh huh.
How about a pulse on it because our book because it's all so how do you book club that you see equally weighted without heat cool because it.
No no share.
Well the trend through the partial hold.
And how much will the channel go to do that and then the ido to that towards the Tommy Lewis, who will go this year, that's cool and I called.
At home.
And hydro how others.
Tracy.
Sure downhill and health is it all day.
And the total Atlanta is equalize and receivable.
And in terms of overseas expansion and this is.
And at what interest me and impulse and some of that and yourself developing games and all day I'll do M&A and some of the E.
The simple element side and you know there's some things that number later and can do it and for example, higher contract. This is leveraging our U S day in the U K I P and using our own kind of R&D to develop and affordable.
And for pockets.
On the M&A side and obviously.
And obviously very interested day in.
Achieving our latest accessories and collaboration.
Collaboration could be different partners around the world and we've actually was always being and active and in messaging and.
Good content globally.
Thank you.
And on.
And your second question asking for the regulatory environment for game broadcasting and Newsy well in general we see that Hum day. This is.
And becoming a more and more popular format of entertainment and Spa.
Boss is being now qualified as the Asian games and there are rumors that it can even potentially be eligible for Olympic games. It is a kind of spot for the young people. So game live streaming is important and that any cc live streaming is building.
And unique edge or south creative game content and it is developed it's also been growing quite a healthy and sustainably music. Obviously, it is becoming increasingly important entertainment and content and it is not only restricted to the enjoyment.
Yes, I listen to me, but just as Willie and previously mentioned.
Watching is the economy.
And then more popular and trending from that so being joining music and the format of entertainment content and so we think you know everything takes.
And it's a progressive way of developing but.
But in general the regulatory environment and this is also more and more incurrent and king for innovation and a catering to the.
The user preferences and behavior and in general So we're very confident and we have our own plans are investing ourselves into these areas.
Thank you and my last question. Thank you.
Our next question is from the line of Kenneth Fong from Credit Suisse.
Alright.
And she said.
And so if you're going to I guess I wonder to what Oh why are we even one can you give some quantum you woman and she knows she the launch that you and Joe, Ohio, and she got back up and Jim would you see or you got to have the IP bulk wall to wall and Diablo immortal pokemon, and how heavy quarter walkman launches and a whole lot for about 10 months and kind of like Oh.
And that's even to a logical yakutia and showroom and Scotia, one revenue actual Cui Inc.
Well when you took over and you come up with insight and Jonathan.
The part that is from Gentiva.
I would translate myself.
I want to ask about the pace and the.
Approximately timing of the launch of a few key IP, including Diablo immortal, a pokemon and as far as the Harry Potter.
Would that be like.
Spread out across different quarters to avoid competition.
Or we will just.
Launch it right when they are ready.
Thank you.
Okay.
Okay.
Thank you <unk>.
So our pipeline first of all we are very confident and excited about our lineup.
For 2020, why including just now.
William and just and introduced a couple of exciting PC games on the mobile side as you all know kit, Harry Potter Diablo Immortal and Pokemon and now all have already received their license approvals and all of these games.
I've developed with the and pension for a global launch. So now that we have got the approval for the China part as to the exact.
Piney point Oh, he's game launches, we we do not rush hour producers and our studios. If we if we are confident that these are high quality games.
And design for them.
A.
Long anticipated longevity, then we are not overly concerned about whether launching.
And this game in this particular months or the next but I think.
We have more confidence now given that the license approval has been obtained that many of the highly anticipated games will be introduced to the gamer community within this year sounds like potentially as early as the first half of this year.
Thank you very much.
Good day time constraint that Congress today's question and answer session. At this time I would tend to conference back to market share for any additional or closing remarks.
Thank you once again for joining yesterday and he has incredible questions. Please feel free to contact us directly or TPG investor Relations.
Thank you.
Hello, everyone.
That concludes today's conference. Thank you everyone for your participation.
[music].