NetEase executive interprets the "AI + Gaming" trend: AI will significantly raise the "success threshold" for leading products

Shanghai Securities News China Securities Network News (Reporter Luo Maolin): On February 11, NetEase released its Q4 2025 and full-year financial reports. During the subsequent conference call, the management provided explanations regarding investors’ questions about the impact of technologies like Google Genie3 on the gaming industry, AI-native game development, and other topics.

The NetEase management stated that the market has largely misunderstood the impact of Google Genie3 on the gaming industry. AI has indeed lowered the “entry barrier” for game production, but at the same time, it has significantly raised the “success threshold” for top-tier products.

“In the AI era, production costs for games are decreasing, but the judgment of top-level gameplay, insights into user needs, and aesthetic taste—these ‘soft skills’—are becoming increasingly scarce. They require deep design expertise and operational experience, forming a moat that new entrants without accumulated experience find hard to cross.” The management also mentioned that the broader significance of AI world models lies in fostering entirely new entertainment types different from traditional games, although current world models are still far from practical application.

Using the film industry as an analogy, the NetEase management said: “From handheld cameras to smartphones, shooting thresholds have continued to decline, but the production barriers for Hollywood blockbusters have been rising.” He pointed out that for commercial blockbuster games, the core barrier has shifted from simple ‘capacity’ to ‘integration ability’—that is, how to seamlessly combine AI technology with complex numerical systems, long-term economic systems, and deep social ecosystems.

Regarding AI investment strategy, NetEase clearly stated that it does not blindly pursue general large models but focuses on vertical fields, aiming to build “the most knowledgeable AI experts in gaming.”

The management emphasized that in vertical domains, high-quality proprietary data is more important than computing power, and application scenarios are more critical than parameter scale. It is reported that NetEase’s self-developed vertical models, built on years of accumulated game data, have successfully been integrated into internal AI pipelines to improve industrial efficiency, promote scalable deployment of AI-native gameplay such as intelligent NPCs and AI teammates in multiple games, and effectively translate into user retention and commercial value.

The NetEase management highlighted that the company’s core advantage lies in possessing a rare “multi-disciplinary” talent team: “Those who are proficient in algorithms and graphics engines, and also have deep cross-disciplinary understanding of game design, are key to ensuring AI technology is effectively implemented and ultimately enhances the gaming experience.”

According to the financial report, NetEase’s R&D investment in 2025 reached 17.7 billion yuan, surpassing 10 billion yuan for six consecutive years. Currently, NetEase’s AI-native pipeline covers the entire production process, including concept art, modeling, animation, audio, levels, and testing, with some stages seeing efficiency improvements of 300%. The management stated that in the future, the company will continue to invest heavily in vertical models, AI-native gameplay, and cultivating multidisciplinary talents, leveraging AI technology to further strengthen its leadership in high-quality R&D and long-term operations.

Additionally, in response to investors’ questions about AI’s impact on the music industry, the NetEase management said that 2026 will be the year of AI explosion, making the entire music content landscape diverse and competitive. “It’s like everyone has a digital camera; not everyone takes good photos, but there will be more photos.” According to the management, since December last year, a large number of users have been creating high-quality AI-generated music content through NetEase Tianyin platform. Besides aiding music creation, AI also helps improve content recommendation algorithms and visual content production.