NetEase Inc (NASDAQ:NTES) stock fell 5.75% (As on November 19, 11:46:16 AM UTC-4, Source: Google Finance) after the company in the third quarter of FY 22 has reported  24.4 billion yuan ($3.4 billion) in net revenues during the third quarter of this year, an increase of 10.1 percent year-on-year. Games and related value-added services net revenues came in at 18.7 billion yuan during the quarter ending in September, up 9.1 percent from a year ago. Cloud Music, the music streaming arm of NetEase, saw its net revenues rise 22.5 percent on a yearly basis to 2.4 billion yuan. Youdao, an intelligent learning firm under NetEase, posted 1.4 billion yuan in net revenue, up 1.1 percent compared with the third quarter of 2021. Non-GAAP net income from continuing operations attributable to the Company’s shareholders was RMB7.5 billion (US$1.1 billion).

Moreover, gross profit for the third quarter of 2022 was RMB13,743.9 million (US$1,932.1 million), compared with RMB12,941.5 million and RMB11,810.8 million for the preceding quarter and the third quarter of 2021, respectively. The quarter-over-quarter and year-over-year increases in games and related value-added services gross profit were primarily due to increased net revenues from online games, including the Fantasy Westward Journey Online series and Infinite Lagrange, and certain newly launched titles. Gross profit margin for games and related value-added services for the third quarter of 2022 was 65.0%, compared with 64.9% and 61.3% for the preceding quarter and the third quarter of 2021, respectively. The year-over-year increase in gross profit margin was mainly due to changes in the revenue contribution from different distribution channels.

Meanwhile, Online game company Blizzard Entertainment Inc. will suspend most Blizzard game services on the Chinese mainland due to the expiration of the current licensing agreements with NetEase on Jan 23, 2023. NetEased confirmed these licenses will expire in January 2023 and will not be renewed. “Net revenues and net income contribution from these licensed Blizzard games represented low single digits as a percentage of NetEase’s total net revenues and net income in 2021 and in the first nine months,” the company said. Affected games include World of Warcraft, the StarCraft series, Hearthstone, Heroes of the Storm and Overwatch. New sales of the titles will be halted in the coming days, with the servers that support online play likely to be turned off in January when the current deal expires. The two companies have a separate agreement covering Diablo Immortal, a mobile game that has proven particularly popular in China since its launch this summer.