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Surging expenses for game promotions and dwindling advertising revenues could weigh on NetEase.com Inc as the online gaming operator grappled with fierce competition in the crowded industry, China Daily reported Friday.
NetEase, one of China's biggest internet portals, may also suffer as the regulatory spat over its operation of blockbuster online game World of Warcraft (WoW).
The company earlier said net income during the third quarter rose to 393.8 million yuan (57.66 million U.S. dollars) from a year earlier. But its gross profit margin of online game services declined to 79.9 percent from 89.7 percent a year ago.
Earlier this month, the General Administration of Press and Publications (GAPP) suspended approval for WoW, while the Ministry of Culture insisted online games were out of GAPP's portfolio.
Advertising sales of NetEase fell 24 percent year on year to 86million yuan in the third quarter because "the 2008 Olympic-effect ceased," said NetEase.
China's online advertising market had been severely hit after the Beijing Olympic Games last year as companies cut their advertising and marketing budgets due to the global economic downturn.
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