NetEase reports a profitable Q1

Chinese online game distributor NetEase has announced its financial results for its first fiscal quarter of 2009, reporting an increase in both revenue and profit attributed to its successful online games business.

Revenue for the quarter ending March 31 were reported at US 114.4 million, up from US 95.4 million during the same period in 2008. Revenue specific to its online games business jumped from US 81.4 million in Q1 2008 to US 106 million, while revenue from NetEase's other services, including advertising and wireless services, were down year-over-year.

Gross profit jumped from US 77.9 million in Q1 2008 to US 93.9 million in 2009, which the company attributes to what it calls its flagship games, namely Fantasy Westward Journey, sequel Westward Journey Online II, and Tianxia II. Its advertising business did not drive significant profit, though the company noted that "The first quarter is normally a low season for the advertising industry in China, especially in 2009 due to the global economic slowdown."

"Our online game business continued to perform well during the first quarter as a result of the longetivity of our game lifecycles, strong user loyalty among our gamers and robust online communities," CEO and director William Ding said.

NetEase is looking forward to successful second and third quarters, with the launch of World of Warcraft in China, which the company acquired after publisher Blizzard cut ties with original Chinese distributor The9 in April.

"Adding to our existing licensing agreements for other Blizzard Entertainment games like Warcraft III and StarCraft II and the Battle.net platform, this new licensing achievement positions NetEase with the most popular MMORPG worldwide in addition to our outstanding portfolio of market leading in-house developed games," said Ding.