NetEase’s Metaverse Planning

The popularity of the Metaverse has made many companies eyeing it, hoping to be the first to eat crabs. Meta is one of the most active, the “All In” Metaverse and has invested heavily. Nvidia wants to be the infrastructure builder of the Metaverse. Microsoft hopes that the combination of soft and hard will win the Metaverse. Tencent is also buying and buying in the related fields of the Metaverse, while Alibaba hopes to build its own e-commerce Metaverse. NetEase also has related layouts. Ding Lei, founder and CEO of NetEase, said that NetEase is well prepared at all levels of Metaverse technology and planning. As soon as the gun rings, NetEase may run faster than anyone else. In addition, they also hope to develop a Metaverse from education, social, gaming, etc.

Earnings conference forecast to enter the Metaverse

NetEase announced the third quarter financial report of 2021. NetEase’s revenue is mainly composed of online games, Youdao, innovative business and other three parts. According to the financial report, NetEase’s net income in the third quarter was RMB 22.2 billion, a year-on-year increase of 19%; net profit was RMB 3.9 billion. Among them, NetEase’s online game service net income reached 15.9 billion yuan, and more than 70% of the income was contributed by games, an increase of 15% year-on-year.

Ding Lei said that NetEase’s online game business has achieved fruitful results in terms of its diversification strategy. The flagship game performed strongly, and the new game was widely favored by enthusiastic players with its high-quality game design. In addition, NetEase Youdao, NetEase Cloud Music and NetEase Yanxuan also continued to maintain a diversified and differentiated product layout.

It is worth noting that Ding Lei talked about his views on the Metaverse in the earnings call for the third quarter of 2021.In the conference call, Ding Lei said that NetEase Metaverse is well prepared at all levels of technology and planning, how to design specifications, how to make technical reserves, and so on. As soon as the gun rings, NetEase may run faster than anyone else.

Youdao is a subsidiary of NetEase that uses big data technology to provide mobile Internet applications. Today, Youdao has launched a series of products such as Youdao Dictionary, Youdao Premium Course, Youdao Translator, Youdao Cloud Notes,, and Youdao Promotion. Youdao’s third-quarter financial report shows that Youdao’s revenue in the third quarter was 1.4 billion yuan, a year-on-year increase of 54.8%.

The financial report shows that Youdao’s business focus has shifted from after-school tutoring to the original four business segments of intelligent learning hardware, quality education, adult education and education informatization. In addition, Youdao announced that it will further increase its investment in adult education. For example, Amazon AWS Chinese online training courses are free and open to the whole society, including topics such as artificial intelligence, machine learning, architecture design, database, network and security, which can help beginners and IT practitioners master the basic knowledge of cloud, and help national cloud computing talents ‘s cultivation. By the end of 2021, it is expected that there will be more than 100 online courses.

Much of the Metaverse is stuck in the concept hype stage these days. Zuckerberg, the founder of Meta, believes that Meta’s investment in the Metaverse will not see benefits in the short term. Apple CEO Tim Cook believes that the essence of the Metaverse is augmented reality (VR/AR). Many Internet companies at home and abroad have deployed around the Metaverse, and in essence, they are all technologies used to expand reality. Regardless of whether the Metaverse is a new world or a new concept, solving real-world problems is king.

Ding Lei also said in the earnings conference that the best educational tool in the future is the combination of artificial intelligence and AR/VR. For example, the arrangement of carbon atoms in diamond is different from that of ordinary graphite. How can this abstract three-dimensional structure become a more preferred learning product for users? The blackboard can only draw a plan, but with the help of AR technology, a person will never forget after seeing the vivid, three-dimensional structure.

Youdao’s future business focus includes education informatization, and I am afraid that it will launch Metaverse + education services. This will also allow NetEase’s overall layout in the Metaverse to expand rapidly.

Trademark registration

Previously, NetEase registered trademarks such as “NetEase Metaverse”, “Leihuo Metaverse” and “Fuxi Metaverse”. The registered trademarks involve advertising sales, education and entertainment, website services, etc. The current status of the trademark is pending.

In fact, many well-known manufacturers have successively registered Metaverse trademarks, such as Tencent’s “King Metaverse”, “QQ Metaverse”, Mihayou’s “Mi Universe”, iQiyi’s “Adventure Metaverse” and Perfect World The “Complete Dollar Universe”, etc.

NetEase's Metaverse Planning

Manufacturers scramble to register Metaverse-related trademarks

Source: Enterprise Check, Tianyan Check, Competitive Research Group

From the above chart, it is not difficult to find that 2021 is an explosive period for the registration of Metaverse-related trademark applications, especially in September. According to incomplete statistics from the Jinghe Research Group, there will be about 140 Metaverse trademark applications in 2021.

Game/Internet manufacturers are keen to register Metaverse trademarks, a large part of which is to prevent trademark squatting. Not to be outdone, NetEase has registered its own Metaverse trademark, laying the foundation for its future entry into the Metaverse.

NetEase’s active investment

NetEase’s third-quarter financial report shows that NetEase’s quarterly R&D expenses were 3.76 billion yuan, a substantial increase over the previous two quarters. It can be seen that NetEase has invested heavily in R&D and actively recruited talents, especially in the Metaverse field that NetEase has frequently announced recently.

On October 25, 2021, NetEase invested in Next World Culture, a company focused on virtual human ecology. Next World Culture has created many avatars, including Di Lieba’s avatar Dili Lengba; Huang Zitao’s avatar Taosman and the virtual band NAND with Ouyang Nana.

NetEase's Metaverse Planning

Dilireba and its avatar Dili Lengba

In addition to Next World Culture, NetEase has also invested in other companies related to the virtual human business, such as Genies, a virtual image technology company, Imvu, a virtual social platform, Maestro, an American live broadcast company specializing in creating virtual interactive concerts, and Beijing Hongmian Xiaoice Technology Co., Ltd. .

VR/AR equipment is a bridge connecting the real world and the virtual world, so the VR/AR field is a very important field of the Metaverse. And NetEase also made a layout very early. NetEase has successively invested in a number of 9 companies related to VR technology, such as VR streaming company NextVR, VR equipment manufacturer AxonVR, virtual image and artificial intelligence modeling Genies.

In addition to the relevant infrastructure, the Metaverse also needs rich and vivid content to attract users to the Metaverse.The UGC (User-generated content, user-generated content) community itself is the strength of NetEase. A series of NetEase products, including NetEase Cloud Music and LOFER, are all community-based products. It can be said that the content is NetEase’s “old line”, and entering the Metaverse has a natural advantage for NetEase.

Virtual human participates in IPO and shows off muscles

On December 2, 2021, NetEase Cloud Music conducted an initial public offering (IPO), codenamed 9899.HK. Ding Lei ushered in the fourth IPO bell ringing ceremony in his life. However, the difference before is that this time there were three Ding Lei IPOs who completed this action at the same time (one of them was Ding Lei himself, who appeared on the Hong Kong Stock Exchange, and the other two appeared online in 2000 and 2021, respectively. Virtual person Ding Lei).The IPO used Metaverse’s technology to make enough gimmicks for NetEase.

On December 4, 2021, at the NetEase Innovation Enterprise Conference held in Hangzhou, NetEase announced its next-generation Internet technology architecture for the Metaverse for the first time. At the meeting, NetEase also launched the virtual human software development kit “Youling” and the immersive activity system “Yaotai”.

At the NetEase Innovation Enterprise Conference, Ruan Liang, vice president of NetEase and general manager of NetEase Zhiqi, announced the technical architecture diagram of NetEase Zhiqi’s layout of next-generation Internet technology applications. Through the global intelligent routing network, cloud computing, artificial intelligence and other underlying technical capabilities, NetEase Zhiqi will provide technologies such as real-time transmission of audio and video, speech recognition, face comparison, etc., and then support games, online meetings, scene-based social networking, virtual Various experience scenes such as concerts and children’s education.

In the technical architecture diagram released by NetEase, users can mainly scan a real person to generate a similar virtual image to answer questions and communicate with other users. At the IPO ceremony of NetEase Cloud Music, three Ding Lei rang the bell on the spot. The technology behind it is NetEase’s Fuxi Yaotai System, a platform that NetEase wants to reconstruct the office scene. The platform has efficient audio Multi-room calling capability and character virtualization capability.

Ruan Liang said that the current application direction of Metaverse mainly focuses on games, social networking and other aspects. Metaverse is the next generation of Internet technology, and NetEase is very important to this new growth curve of the Metaverse. The Metaverse needs to be advanced step by step, and the technology behind it needs to evolve more rapidly and continuously.

In September 2017, NetEase Fuxi Lab was established. The R&D and business of NetEase Fuxi Lab is mainly focused on using artificial intelligence to innovate player experience in games. According to the introduction, NetEase Fuxi Lab has published more than 80 papers on top artificial intelligence conferences, submitted more than 230 patents, and served more than 100 enterprises. Li Renjie, co-head of NetEase Fuxi Artificial Intelligence Laboratory, said that after several years of precipitation, NetEase Fuxi Laboratory has entered the second stage, hoping to empower education, industry, entertainment and other fields with the technology accumulated in the game field.

The virtual human software development kit launched at the NetEase Innovation Enterprise Conference Lingling includes multiple modules such as 3D intelligent face pinching, 3D animation synthesis, and speech synthesis. The user can give this software development kit to make a virtual digital human. The purpose of spirit is to lower the threshold for making virtual people. For example, users only need to input text to synthesize high-quality, natural speech, and select the most suitable timbre output language expression for the virtual human, which simplifies the production process and time.

Then there is the immersive activity system Yaotai. This system is mainly oriented to application scenarios such as events, exhibitions, conferences, etc., so that participants can customize their own images, perform movement and expression migration, and obtain an immersive virtual event experience. Due to the epidemic, the demand for online meetings was born, but the sense of immersion was still insufficient, so Yaotai came into being.

Li Renjie said that NetEase used the Yaotai system to gather more than 300 scholars at home and abroad to hold a multi-day international academic conference on distributed artificial intelligence in the game “Backwater Cold”. The system has received good feedback from many professors and scholars. According to the introduction, the Yaotai system mainly adopts cloud game technology. Users do not need to download the client, and can participate in the conference with a link on their mobile phone or computer. In addition, the data analysis system, lottery system, multi-style reception venues and other configurations will be launched in the future.

At present, the Yaotai system is mainly for enterprises. Netease will add more UGC content in the future and gradually open it to consumer users. According to the plan, in the future, users can use Yaotai to build a virtual space on the platform according to the appearance of home, hold family gatherings, or users can play script killing games on the platform, and can also make scenes and props, which is very similar to the Metaverse ‘s prototype.

In addition, NetEase Zhiqi, a subsidiary of NetEase, also released related products. Ruan Liang believes that the rapid development of communication and security in the future will become the cornerstone of the development of the Metaverse world. NetEase Zhiqi announced that it has provided solutions for enterprise digital risk control and content risk control. For example, it cooperates with the ZEPETO platform to provide instant messaging and content security for ZEPETO. ZEPETO is a face pinching game that many people have played. It allows users to hold virtual fan gatherings and other activities. It has 250 million registered users worldwide and is the largest Metaverse platform in Asia today.

Ruan Liang believes that Metaverse’s equipment, especially the new generation Quest3 and Quest4, may be iterated soon with the heavy investment of Meta, driving the overall development of the Metaverse market. However, he believes that the Metaverse as a whole is still in the early stage of exploration, the technology is not yet mature, the application scenarios are uncertain, and security compliance issues also require further attention. He is very confident in the Metaverse business that NetEase has laid out. He also revealed that NetEase Intelligence will have three main development directions in the future. The first is to help enterprises cope with the new era of digital risk control through NetEase Yidun products; the second is to help enterprises integrate new applications of communication through network cloud products; the third is to help enterprises find new space for business growth through NetEase cloud business products.

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