NetEase

• 1. Introduction

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  NetEase is a Chinese internet company whose web address, 163.com, is a leftover from the dial-up era. Before broadband arrived, Chinese internet users had to dial 163 to get online. The number later became tied to the company's name. Ding Lei founded NetEase in June 1997 with just three employees. By 2023 the company was reporting revenue of US$14.6 billion. It makes video games, runs a news aggregator, streams music, sells advertising, and offers email and online shopping. How did a team of three grow into a business of that size? Which partnerships carried it forward, and which ones ended abruptly? And why does this company keep turning up in places where no internet firm is expected to go?

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• 2. Dot-Com Years

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  Ding Lei's company started out selling e-mail servers to internet access providers. Soon it built its own websites, which centered on bilingual e-mail and chat rooms. Its e-mail domain became popular across China. NetEase introduced the country's first free e-mail service, its first online community, and its first personalized information service. After two funding rounds, the company had raised nearly $20 million by the end of 1999.

  In 1999, NetEase also hosted an online literature contest. The referees were the writers Wang Meng, Liu Xinwu, and Mo Yan. The competition helped internet literature in China get its start.

  On the 1st of July 2000, NetEase floated its shares on Nasdaq. It issued 4.5 million shares at $15.5 each, and Merrill underwrote the offering. The timing was awkward. China had made it hard for its internet companies to reach Western markets, and Western investors were wary of Chinese technology firms. The listing was delayed by several months, and the stock performed poorly at first.

  In June 2001, several top executives left after it emerged that the company's sales data might have been misreported. NetEase was in the middle of buy-out talks with i-Cable Communications at the time. Those talks ended soon afterward.

  By 2003, NetEase had taken investments from Softbank, ING Baring, Goldman Sachs, Techpacific.com, and News Corporation. Its e-mail service had 1.7 million registered users, and its sites drew over four million page views every day. The company had hired 200 people across Beijing, Guangzhou, and Shanghai.

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• 3. Blizzard Years

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  NetEase Games was formed in 2001, and in December the company released its own massively multiplayer role-playing game, Westward Journey Online. By 2006 the game had 22 million users, with an average of more than 400,000 playing at once.

  In 2008, NetEase began a partnership with Blizzard Entertainment to publish the American studio's games in China. In 2013 it licensed Hearthstone, Blizzard's free-to-play online strategy card game. To reach English-speaking players, the company opened its first U.S. office in the San Francisco Bay Area in February 2015.

  A mobile version of Fantasy Westward Journey arrived in March 2015. Within two hours it reached the top of the free games chart. In its first year it hit 60 million registered users, with a concurrent peak above two million. In June 2015, NetEase announced a licensing agreement with Blizzard to publish Overwatch.

  By 2016, NetEase held a portfolio of more than 90 mobile games, with 41 more in development. In May 2016 it announced a partnership with Microsoft and Mojang Studios to bring Minecraft to Asia. Free-to-play versions for PC, iOS, and Android launched across August, September, and October of the following year. In October 2017 the game had nearly 30 million players. By May 2018, NetEase had over 100 million users.

  The Blizzard partnership lasted 14 years. In November 2022, Blizzard Activision ended its licensing agreement with NetEase. On the 23rd of January 2023, seven titles were shut down in China: World of Warcraft, Hearthstone, Warcraft III: Reforged, Overwatch, StarCraft, Diablo III, and Heroes of the Storm. It took a year and a half to reach a new agreement, in April 2024. The two companies also agreed to bring NetEase titles to Xbox platforms.

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• 4. Buying and Cutting Studios

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  In January 2018, NetEase and Mattel launched a new game developer called Mattel163. In June of that year, NetEase invested US$100 million in Bungie for a minority stake and a seat on the board. From August, it took over publishing EVE Online in China. In November, Blizzard announced Diablo Immortal, a mobile role-playing game co-developed with NetEase. It reached PC and was released in June 2022, then arrived in China the following month.

  The Bungie tie later produced another mobile title. In October 2024, NetEase announced it was developing and publishing Destiny: Rising, a free-to-play role-playing shooter, in partnership with Bungie. The game was released in August 2025.

  Between 2020 and 2023, NetEase backed a long list of new studios, many led by industry veterans. In June 2020, former Capcom employee Ryosuke Yoshida opened Ouka Studios. In October 2021, NetEase bought Grasshopper Manufacture from GungHo Online Entertainment. The next month it took an 8% stake in the indie publisher Devolver Digital, which was listing on the London Stock Exchange. Toshihiro Nagoshi, Daisuke Sato, and several former Sega employees founded Nagoshi Studio in January 2022.

  July 2022 brought Jar Of Sparks, established with Jerry Hook, a former Halo Studios employee. NetEase also invested in the Polish VR studio Something Random. In August it acquired Quantic Dream, following a minority investment in 2019. Former Capcom producer Hiroyuki Kobayashi established GPTRACK50 in October. In November, NetEase made a strategic investment in Rebel Wolves, founded by Konrad Tomaszkiewicz, a former CD Projekt employee.

  In 2023 the pace continued. NetEase acquired SkyBox Labs in January and opened the studio Spliced in February. Control game designer Paul Ehreth led Anchor Point Studios, launched in April. In August, NetEase established T-Minus Zero Entertainment, founded by Bethesda and BioWare veterans. In November, Greg Street, a former Blizzard employee, established Fantastic Pixel Castle.

  Since 2024, the direction has reversed. NetEase has been trying to sell off foreign investments, citing changes in the video game industry. It wanted a smaller, tighter portfolio that could compete with Tencent and MiHoYo's Genshin Impact. Funding to over a dozen studios was cut. Many were shut down, a majority of them acquired only five years earlier.

  Ouka Studios closed in August 2024, after the release of Visions of Mana. Worlds Untold paused operations in November 2024, and Jar of Sparks shut down in January 2025. T-Minus Zero was closed in August and sold in September. Fantastic Pixel Castle and Bad Brain Game Studios closed in November. NetEase also ended its partnership with Jackalyptic Games, which had been working on an unannounced MMO based on the Warhammer tabletop wargame.

  Not every studio met the same fate. NetEase published the 2024 remaster of Shadows of the Damned and holds the copyright to Romeo Is a Dead Man. Even so, Grasshopper Manufacture talked with several publishers before settling on self-publishing its newest title. GPTRACK50 and Nagoshi Studio will self-publish Stupid Never Dies and Gang of Dragon. A NetEase spokesman confirmed that Nagoshi Studio would stop receiving funding from May 2026. Gang of Dragon still needed an additional $44 million to be finished. Meanwhile, Liquid Swords is working on Samson: A Tyndalston Story.

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• 5. The Marvel Connection

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  In 2015, NetEase launched NetEase Comics to focus on the comic book business. Two years later it signed a collaboration deal with Marvel Comics to publish comics in China and create Chinese superheroes. Two of those characters were Swordmaster and Aero. By 2018, the platform had published more than 2,000 comic book series and had 40 million registered users. At the end of that year, NetEase sold the comics business to Bilibili. It kept the copyright to its Marvel series.

  The Marvel link returned in March 2024, when NetEase and Marvel Games announced Marvel Rivals. It is a team-based PVP shooter featuring characters from Marvel Comics. The game was released in December 2024 on Windows, PlayStation 5, Xbox Series X, and Xbox Series S. Ten million users registered within its first three days. By February 2025 it had reached 40 million players.

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• 6. Cloud Music

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  In August 2005, NetEase announced it would close its MP3 service because pirated music was spreading. Eight years later, it tried music again. In April 2013, the company launched a streaming service called NetEase Cloud Music.

  In 2014, Tencent sued NetEase, alleging copyright infringement. Tencent used the suit as pressure to push NetEase into sublicensing music rights. The resulting arrangement became a model for other online music platforms in China.

  By 2017, Cloud Music had received enough funding to be valued at over $1 billion, which earned it unicorn status. In December 2017, a licensing agreement with Kobalt Music Group gave it access to over 600,000 songs. Tencent held deals with the big three record labels, so NetEase focused on independent artists. By 2018, over 70,000 of them had uploaded more than 1.2 million songs. In November 2018, NetEase signed a non-exclusive partnership with the indie label Merlin Network.

  In September 2019, Alibaba announced a $700 million investment for a minority stake in NetEase Cloud Music. By the end of 2019 the service had passed 800 million registered users, up 200 million from the year before.

  In 2020, NetEase signed licensing agreements with Warner Chappell Music and Universal Music Group. In May 2021 it entered a direct digital distribution relationship with Sony Music Entertainment. In August 2021, it spun off the music business as a separate company and listed it on the Hong Kong Stock Exchange.

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• 7. Side Bets

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  In December 2007, NetEase officially launched its own search engine, Youdao, replacing a partnership with Google that had run since 2000. Applications under the Youdao name followed, including a shopping assistant and a dictionary. That year, NetEase was China's second most popular Google search term, behind its rival Sina.

  A blog service had started in September 2006. In August 2011, NetEase launched Lofter, a forum for internet subcultures. It grew into one of the most popular platforms for fan fiction in China. When NetEase Blog closed in 2018, users were told to move their posts to Lofter.

  January 2011 brought L.163.com, a luxury goods shopping platform that was shut down in December of the same year. Commerce proved more lasting in 2015, when NetEase launched the e-commerce platform Yanxuan. In January of that year, it also announced Kaola.com, a cross-border platform selling goods from overseas merchants. Kaola.com was built to compete directly with Alibaba and JD.com. In 2019, NetEase sold it to Alibaba for $2 billion.

  In March 2012, the official company name changed from NetEase.com, Inc to NetEase, Inc. In April, NetEase began testing a restaurant recommendation app called Fan Fan. In October 2013, Coursera announced a partnership with NetEase to launch Coursera Zone, a Chinese-language web portal. NetEase started its own online course platform in 2014.

  By 2016, NetEase shares had risen 200% over the previous three years. By 2017 it was the largest provider of free e-mail in China, with over 940 million users. It also ran the domains 188.com and 126.com.

  In June 2020, NetEase made a secondary listing in Hong Kong. In August 2020, it announced a capital and business alliance with the anime studio Satelight. That October, the Cyberspace Administration of China ordered NetEase to undergo "rectification" and temporarily suspend some comment functions. Censors had found inappropriate comments on the news app.

  In November 2022, NetEase announced an investment in the Norwegian fitness startup PlayPulse. In March 2023, it launched the Anici anime brand, which makes animation for a variety of partners.

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• 8. Pig Farming

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  In 2009, Ding Lei announced his intention to modernize pig farming in China. In 2011, the company's agricultural affiliate, Weiyang, set up a pig farm in Anji county, Huzhou, in Zhejiang province. The facility was meant to be state of the art. It had tracking sensors, data analysis, soothing music, artificial intelligence, and Wi-Fi. The public could follow the pigs online.

  In November 2016, NetEase held an online auction that sold three of its Jeju Black pigs for a total of $75,000. Since the meat reached the market, NetEase has sold it through its Yanxuan platform. In 2017, Meituan Dianping, Sinovation Ventures, and JD.com invested in the venture. By 2018, the facility was overseeing the rearing and slaughter of 20,000 organic free-range hogs each year.

  In October 2017, NetEase announced a second farm in Gao'an, in Jiangxi. In September 2019, it said it would invest 1.5 billion yuan, or $211 million, to build another pig farm in Shaoxing.

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