Not every online gaming company is created equal. Just two days after Perfect World
The Chinese company's revenue climbed just 9% to $128.8 million during the same three months. Earnings held up better, increasing 26% to $0.44 a share. Perfect World was a tough act to follow, but NetEase didn't even live up to Mr. Market's expectations. Analysts were targeting a profit of $0.49 a share on $138.7 million in revenue (which would have called for revenue to grow twice as quickly as it ultimately did).
NetEase has a scapegoat, but it's on a short leash. Regulators kept NetEase from launching its licensed version of Activision Blizzard's
Even without WoW, however, NetEase still should have been able to deliver better growth organically. All of the company's growth came from its online gaming business, which now accounts for a meaty 88% of revenue. Online advertising through its NetEase.com portal, and its content services for mobile phones, just aren't moving the needle anymore.
Beyond World of Warcraft, NetEase has a rich pipeline of new games and expansion packs for existing franchises on the way. Slow growth is still better than no growth, and at the service's peak usage for the quarter, on Aug. 2, as many as 2.5 million Chinese gamers were playing NetEase titles simultaneously.
The company still has plenty to prove. After blowing analysts away in each of its three previous quarters, last night's miss is problematic. Perfect World and ChangYou.com
It's time to get back in the game, NetEase. You may have fewer investors than you do paying gamers, but the former are far hungrier for a win next time around.