NetEase

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NetEase (網易) NASDAQ: NTES is a Chinese Internet company that operates 163.com, a popular web portal which received over 546 million page views in June of 2005. The company has grown rapidly since its founding in June 1997, thanks in part to its investment in search engine technology and massively multiplayer online gaming. Fantasy Westward Journey, an MMORPG developed internally by NetEase, is an online game in China. NetEase.com, Inc. (网易公司) has a market value of 761.6 million USD^[1] as of April 2006, and 1600 employees as of February 2006^[2].

In 2004, NetEase's founder and chief architect William Ding (Ding Lei) won the Wharton Infosys Business Transformation Award for his innovative use of information technology. Ding became one of the wealthiest individuals in China after founding NetEase.

The domain 163.com attracted at least 1.8 million visitors annually by 2008 according to a Compete.com survey.

Company Snapshot Recent price (4/3/08) : ADS outstanding, basic: Market capitalization : Institutional ownership : Insider and 5%+ owners : Cash and time deposits (12/31/07) : Cash per ADS, basic : $19.41 121.3 million $2.4 billion 25.9% 47.6% $570.1 million $4.70

Businesses Online Games: The leading provider of MMORPG (Multi-player online role-playing games) for the Chinese market. Internet Portal: One of the leading portals in China. Advertising Services: Providing a massive marketing platform for advertisers- opportunity to reach one of the largest user bases in China. Blog Services: Developed in-house and integrates various NTES web products. Many unique functions- perfect personal web space for every one. Search Engine: NTES’s new search engine- creating a powerful platform to serve people with easy search tools. Wireless VAS: Offering a wide-range of services- users receive news and other information through arrangements with leading mobile phone operators in China.

A Massive Marketing Platform The NetEase family of websites provide a massive interactive marketing platform for advertisers: • Over 640 million average daily page views for the month of December. • Access to an extremely large and loyal user base who are young trendsetters. Sino-monitor’s China Marketing and Media Study named NetEase as the number one media for university students among all traditional and online media in China.

Self-developed Games - Commercially launched: Fantasy Westward Journey- 2D (PCU over 1.3M) Westward Journey Online II- 2D (PCU almost 500K) Westward Journey Online III- 2D (PCU of 118K) Casual Games- released to date: 28 mini and 3 advanced casual games. Pipeline: WJII expansion pack to be launched 3Q 08 WJIII additional features released 1Q 08 Datang II- 2.5D Tianxia II- under re-development, closed beta testing- 3D Licensing opportunities in progress

Fantasy Westward Journey In terms of PCU, #1 MMORPG game in China. Launched in Jaunary 2004, adpated from The Journey to the West. Record number of peak concurrent users of 1.5M in Dec. 2007. Olympic-theme online activities to be incorporated into FWJ around Q1 08.

Westward Journey Online II NetEase’s first in-house MMORPG game. Launched in 2002- an adaptation of The Journey to the West. Expansion pack to be released in Q4 08. PCU reached 367,000 at end of Q4 07.

Westward Journey Online III New, improved version of Westward Journey Online II- commercialized in September 2007. During Q1 08- expected release of expansion pack with additional features.

NetEase continues to expand Content and Services NetEase has diverse high-quality content channels and continues to seek new ways to enhance content: • Forming and/or seeking partnerships with well-established vertical sites. • Focusing resources on other key channels. NetEase maintains a dominant position as the leading free email provider in China. NetEase continues to upgrade its advertising services and tracking systems to capture growth in this early-stage online advertising market.

Recent Highlights PCU for Fantasy Westward Journey hit an all-time high of 1.5 million in 4Q 07 Ongoing evaluation of licensing opportunities. Strongest growth sectors of online advertising for NetEase in 4Q 07: • IT & Internet • Automobiles & related products Gearing up for the Beijing 2008 Games- a focus on capturing users and building market share. Achieved record growth in advertising services during 4Q 07. Free email service continues to lead Chinese market. • Monetization of email asset base continues to be a focus of the Company. Continued development and enhancement of search engine during 4Q 07. • Creating a market-leading search engine: highly versatile, user-friendly, and geared specifically for the Chinese Internet user.