(Yicai Global) May 26 -- Chinese internet titan NetEase reported a 53.7 percent surge in net profit in the first quarter from the same period last year on strong growth in its gaming business and better cost control.

NetEase raked in net profit of CNY6.8 billion (USD963.5 million) in the three months ended March 31, the Hangzhou-based company said in its latest earnings report. Revenue jumped 6.3 percent to CNY25 billion (USD3.5 billion).

Earnings from gaming and game-related value-added services accounted for 80.4 percent of the total at CNY20.1 billion, an increase of 7.6 percent year on year.

This growth was mainly thanks to an increase in income from online games, such as party game “Eggy Party” that NetEase released last May, and the fact that the firm paid the royalties on the games that it is licensed to operate in the previous quarter, it said yesterday.

No guidance was given on future performance.

NetEase discontinued some games in January, whose profit margins were relatively small, and this helped change the revenue structure to one that benefits more from games with higher profit margins, the internet giant said.

Although no titles were given, the licensing tie-up between NetEase and Blizzard Entertainment came to an end on Jan. 23, rendering most of the US game publisher’s highly popular games, such as World of Warcraft, StarCraft, Healthstone and Overwatch, no longer available on the mainland.

NetEase continues to invest in developing its own key technologies such as large language models. The firm spent CNY3.7 billion (USD524.3 million) on AI research in the first three months, accounting for 15 percent of its total revenue, according to the earnings report. NetEase is applying its self-developed AI tech to the entire game commercialization process and has improved work efficiency in crucial links by 90 percent.

“Regarding large language models, the firms that win are those which are able to choose excellent application scenarios. Therefore, NetEase’s main task is to explore the application of these AI models and develop products that are more suited to users’ needs,” said Chief Executive William Ding.

NetEase runs 10 overseas studios at present, it added.

Editors: Xu Wei, Kim Taylor