In recent years, NetEase Games' overseas journey can be described as "ice and fire" - the North American market has repeatedly hit a wall, but the Japanese market has unexpectedly become a "blessed land". From "Onmyoji" to "Wilderness Action", NetEase has set off one game storm after another in the Japanese market. However, with the intensification of competition and changes in the market environment, NetEase's fundamentals in Japan are also facing challenges. Today, let's talk about NetEase's "fantasy drifting" in the Japanese market.

Success: From Onmyoji to Wilderness Ops

NetEase Games' journey to the sea began in 2014, with North America being the first stop. However, the complexity and fierce competition in the North American market made NetEase's initial attempts not smooth. In contrast, the Japanese market has become a "blessed land" for NetEase.

In 2016, NetEase's "Onmyoji", which was a huge success in China, began to enter the overseas market. With its beautiful art style, unique cultural background, and in-depth gameplay, Onmyoji quickly became popular in Japan, topping the Japanese App Store download charts on the day it was launched. This not only opened the door to the Japanese market for NetEase, but also made NetEase aware of the strong demand for high-quality games from Japanese players.

Then, in 2017, Wilderness Action set off a boom in the Japanese market. Although the game encountered strong resistance from Tencent's "Peace Elite" in China, it has become a phenomenal product in Japan. The unfamiliarity of Japanese players with 3D open-world games allowed Wilderness Ops to quickly take over the market, with 80% of the game's revenue coming from Japan in 2018. To this day, "Wilderness Action" is still an important source of overseas income for NetEase Games.

Dilemma: Intensified competition and growth bottlenecks

Despite NetEase's remarkable success in the Japanese market, the market has become increasingly competitive over time. Especially in recent years, other domestic game manufacturers such as miHoYo and Sanqi Mutual Entertainment have increased their efforts to go overseas, and the Japanese market has become their key target.

miHoYo's Genshin Impact has been a huge success worldwide, especially in the Japanese market, and its influence even surpasses NetEase's Wilderness Action. With high-quality game content and continuous updates, Genshin Impact has not only attracted a large number of players, but also established strong brand recognition in the Japanese market. In contrast, NetEase's product line in the Japanese market is relatively simple, mainly relying on a few games such as "Wilderness Action", and lacks a diversified product layout.

In addition, the size of the Japanese market is relatively limited. Although Japanese players have a strong ability to pay, they have a small population base and the market size cannot be compared to North America or Europe. Although NetEase's success in the Japanese market has brought it considerable revenue, it is obviously not enough to rely on the Japanese market alone to achieve the goal of "40%-50% of the overseas market" proposed by Ding Lei.

Response: Diversified layout and investment strategy

In the face of competitive pressure and growth bottlenecks in the Japanese market, NetEase began to adjust its overseas strategy, trying to consolidate its position in the global market through diversified product layout and investment strategies.

In recent years, NetEase has increased its investment in overseas game studios, especially in the European and American markets. In 2022, NetEase established Jar of Sparks and Jack Emmert Studios in the United States, focusing on developing top-tier PC and console games. Industry veteran game designer Jack Emmert is known for his MMORPG work, having worked on Marvel Universe Online and Star Trek Online. In addition, NetEase has also invested in Quantic Dream Studios in France and Rebel Wolves Studios in Poland, hoping to create game products with global influence by cooperating with internationally renowned game production teams.

At the same time, NetEase is also actively expanding into other overseas markets. In 2024, NetEase's "Egg Boy Party" will begin to be promoted to regions such as the Americas, Europe, and Africa after gaining a foothold in the Southeast Asian market. The success of this game has brought new growth points to NetEase and injected new impetus into its globalization strategy.

The success of NetEase Games in the Japanese market has laid a solid foundation for its overseas strategy, but with the intensification of competition and changes in the market environment, NetEase is also facing unprecedented challenges. In order to occupy a larger share of the global game market, NetEase needs to further expand into more potential markets such as Europe and the United States while maintaining its advantage in the Japanese market. Through diversified product layout and continuous investment, NetEase may be able to occupy a place in the global game market in the future.

However, the road to the sea is not all smooth sailing, and it can be said that it will take time to verify whether NetEase can stand out in the fierce competition.

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