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NetEase.com Q1 2007 Earnings Call Transcript

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2007-05-21 19:05:06.0

Tags: NetEase Inc.

Question-and-Answer Session

Operator

(Operator Instructions)

First we’ll hear from Richard Ji of Morgan Stanley.

Richard Ji - Morgan Stanley

Good morning. I have two questions. The first, obviously starting with your Westward Journey III. Could you just help us understand a little better how you will ensure the stability of the user base during the migration process?

Michael Tong

The stability of the users -- well, basically first of all we have to explain that Westward Journey III, as we have mentioned in the conference calls now, that the game play will be the standard game play in Westward Journey II will also be in Westward Journey III. Also, at the same time the user date, which is the most important, in Westward Journey II will also be migrated to Westward Journey III. So all those experience points that players have played in Westward Journey II, all these things will all be migrated into Westward Journey III. This is very important for the users.

But Westward Journey III, we also look at it as a fairly new game. For example, all the graphics will be 100% new, as compared to Westward Journey II. The reason for that is especially because there are new game designs, new game play that we are designing with these new graphics that can be implemented in this new game. Because in Westward Journey II, the engine has been old and a lot of things that we want to implement just cannot be implemented. But with the new engine, new graphics, we can do a lot more and be able to retain the existing users and at the same time try to attract new users as well.

Richard Ji - Morgan Stanley

In terms of technical complexity, the new game will not increase the hardware requirements?

Michael Tong

Basically, no. The game will continue to be a turn-based game and the hardware requirement will continue to be very low. It is going to be a 2.5D game. It is not going to be a 3D game, so it should be totally fine.

Richard Ji - Morgan Stanley

Okay, good and my second question is regarding your online search and portal strategy. Obviously we know you have heavy traffic on your leading portal. I’m particularly interested in how you are going to monetize your portal traffic. Will it be more focused on your online brand advertising strategy? Also, can you also help us to understand a little better about the commercialization of your paid search? Thank you.

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