Netease followed suit in AI large-scale model competition, Ding Lei slapped him in the face

Source: "Commercial Show" (ID: shangyexiu66), author: Cui Si, editor: Zhang Hongyi

Image source: Generated by Unbounded AI tool

In the AI large-scale model competition, Zhou Feng may have never been so excited and determined.

On July 26, after Netease Youdao's "Ziyue" educational large-scale application results conference, he said in an interview with the media that the impact of large-scale models on education will be subversive. He even affirmed that this will definitely have a profound impact on students' learning content and learning goals.

Zhou Feng compares this impact to, "It's like having a calculator, and the requirements for students' computing ability are not so high"; and "with the large educational model, the requirements for rote knowledge-based learning will also increase. reduce".

Netease Youdao said that "Ziyue" is the first large vertical model in the field of education in China, and launched six major applications based on the "Ziyue" large model-LLM translation, virtual population language coaching, AI composition guidance, grammar Intensive lectures, AI Box, and document Q&A.

"Zi Yue" is just one of Netease's big models. As early as after the financial report for the first quarter ended, NetEase successively announced large-scale models based on multiple scenarios such as education, industry, music, and graphics, and launched related products.

At this time, NetEase has directly brought a "stereotype" to the outside world - "We must also all in to keep up with the trend of large models."

**On July 18, 2018, in the program "Twenty People in Ten Years" broadcast on Wu Xiaobo Channel, Ding Lei said, "In the past ten years, there have been various winds, but in fact many of them were evil winds." He believes that when the business model is not clear, there is no need to follow the trend. **

**This time, Netease CEO Ding Lei seems to have figured it out, and he broke his previous view of "not following the trend" with his actions. **

With the launch of these large models, NetEase expects to bring in more revenue and improve its single revenue structure.

The financial report for the first quarter of 2023 shows that NetEase’s game business accounts for 80% of its total revenue. In other words, most of NetEase's growth comes from the game business, and other businesses are showing a downward trend.

NetEase is looking for a second growth curve other than games, while NetEase Cloud Music and NetEase Youdao have been difficult to become the second growth curve. Now, finally comes the sexy and exciting big model story.

An industry insider told "Business Show" that NetEase Youdao's education track may become NetEase's second curve with the help of large models. On the other hand, Youdao has been in the education industry for many years and has accumulated a certain amount of technology and resources.”

But the other side of the coin is that the ease of implementation of the education track has also made it a place of contention for all parties.

Today, not only domestic education companies such as TAL have entered the market, but also players such as Baidu and HKUST Xunfei have entered the market. Although the competition in this industry is fierce, the homogeneity of the products launched by each company is very high.

**NetEase launched a large-scale education model at this time. How big is the so-called "actual subversive impact"? Can following the trend and fighting against the big model help Netease find the second growth curve? **

**Subverting the effect of education? **

In the face of the changes brought about by the large model, NetEase is quite confident, especially in the field of education.

The latest quarterly financial report shows that NetEase Youdao’s performance has declined significantly, but NetEase Youdao CEO Zhou Feng is full of confidence, saying that “Youdao will make full use of the huge user base of learning services and smart hardware, as well as our AI technology, especially this year. The advantages of generative AI technology, which has received much attention, can improve user experience and promote sustainable business growth.”

NetEase Youdao does have a certain amount of technology accumulation. In 2017, NetEase Youdao began to research Transformer technology (large-scale model core technology), and in 2019, Youdao Dictionary Pen 2 was equipped with offline Transformer NMT for the first time. In 2022, Youdao Dictionary Pen P5 will also be upgraded from self-developed offline ASR to Transformer technology.

Today, the emergence of large models has brought a broad space for imagination to domestic educational products. At the 2023 World Artificial Intelligence Conference not long ago, "Business Show" was also seen in the exhibition hall. Many companies have launched virtual digital humans for teaching, attracting many parents and students to stop and watch the experience.

However, the access of virtual humans to educational scenes has also sparked a series of controversies. **Especially at the level of tutoring students' homework, using virtual humans for oral dialogue training seems to be able to achieve personalized tutoring with "thousands of people and faces". But can the role of a virtual human language coach replace a real person to provide targeted guidance. In other words, it may just be biased towards daily auxiliary training to help students strengthen their sense of language. **

Some people in the industry told "Business Show" that the above two have very different effects, and will naturally directly affect users' willingness to buy. "If it's only for auxiliary purposes, then there are many similar free training software on the market that also have similar effects. Why should users spend money to buy a new large-scale model product?"

From the perspective of business needs and transactions, users have no willingness to make a strong payment for such a product.

**As for functions such as AI composition guidance, grammar lectures, and document question-and-answer, a person engaged in education said that the intervention of AI should also pay attention to the accuracy of guidance. The important thing is to be able to guarantee 100% accuracy of the reply, only in this way, so as not to "mistake others". **

The person added, "Unlike other industries, the error tolerance rate in the education field is low, and the accuracy of the large model is very high. If there is a certain deviation in the large model, it is easy to mislead students. This is the current AI An important reason why it is difficult to replace real people.”

Under the wave of large models, the integration of large models and education makes education more efficient, but the actual results should also be considered when facing users.

In addition to the need to solve the problem of real landing of innovative applications of large models, Netease Youdao also needs to return to the core competitiveness of products.

Nowadays, the competition of large-scale models of educational scenes in China has the trend of "opponents are like clouds, and soldiers are approaching the city".

First, at the beginning of May this year, Xueersi and iFLYTEK successively released self-developed mathematical models and Xinghuo cognitive models. Xueersi said that it will launch a product-level application based on this large model this year, and HKUST Xunfei has already implemented the Spark large model on the AI learning machine, which also provides functions such as correcting compositions and oral dialogue.

In addition, the Xiaodu Qinghe learning mobile phone released by Baidu in May this year is also equipped with a large model of Xiaodu Lingji, and provides functions such as AI interactive lectures, writing guidance, and oral practice.

“Business Show” After evaluating the products and functions released by each company, it is found that the homogeneity of each product is serious and there are not many innovations.

The current status of this track is that as long as any product launches a certain function, each company will soon follow up and copy it. If Netease Youdao wants to get a share of it, it must create more differences.

**What's the catch? **

In addition to the landing education scene, in this AI large-scale model competition, the pace of NetEase's advancement is just one word "fast".

At the Zhejiang Provincial Platform Economy High-Quality Development Conference on July 5, NetEase CEO Ding Lei said, "Exploring the innovation and application of AI large models at the fastest speed is NetEase's top priority."

One day later, at the 2023 World Artificial Intelligence Conference (WAIC), NetEase showcased a variety of AI large-scale model products, mainly in games, education, industry, and music scenes.

And these are also the areas where NetEase's current core business sector is located. It can be seen that NetEase and Ding Lei will not want to miss any opportunity to land a large model. So try to apply the big model to different fields, even if the field is not its familiar business scope.

For example, in the industrial field, NetEase Fuxi (an artificial intelligence research institution under NetEase) has developed industrial large-scale models and launched unmanned loading robots and excavating robots. The plan is to participate in the construction of mines, railways and other scenarios.

According to NetEase officials, NetEase Fuxi unmanned loading robots have been applied to the intelligent concrete mixing station of the Shanghai-Tongtong Railway, and will be delivered in batches within this year.

At the same time, Netease Fuxi excavator robot has continued to explore the possibility of landing other construction scenarios this year since it landed on the plateau at the end of last year to participate in key infrastructure railway projects in Southwest China.

** The industry believes that the unmanned loading robot is jointly developed by NetEase Fuxi and China Construction Eighth Engineering Bureau. It is more like a customized product. It may need to be adjusted in other construction scenarios in the future to be used efficiently. Netease is still exploring the landing scenario of mining robots, and whether it can be scaled up in the future remains to be considered. **

In the familiar field of music, Netease Tianyin provides musicians with auxiliary creation tools such as AI lyrics, AI arrangement, and one-click demo based on the self-developed AIGC algorithm, helping musicians improve production efficiency and production quality.

However, AI extracts materials from existing music, and the industry believes that this may involve copyright issues, and it will also weaken the innovation of the music industry to a certain extent.

In the field of games, which is the pillar of NetEase’s revenue, NetEase Mutual Entertainment AI LAB has developed dozens of AI efficiency improvement tools, covering AI voice generation, AI original painting generation, AI video motion capture, AI model generation and many other links.

**In just half a year, from the familiar game and music field to the unfamiliar industrial field, NetEase changed its previous insistence of "not chasing the trend", and quickly landed large models in various scenes, racing wildly in the AI large model competition. **

On July 26, after the 2023WAIC showcased large-scale model products in different fields, NetEase Youdao launched a large-scale model "Ziyue" for the vertical education industry, and launched six innovative applications based on the large-scale model of Ziyue.

At the press conference, Zhou Feng emphasized the importance of "scenes" many times. "Whether a good technology has value and whether it can play a huge role, the key lies in the choice of scenes and applications and the polishing of details."

So far, judging from all the large-scale model products released by NetEase, they mainly serve the internal ecosystem of NetEase and help existing businesses improve their competitiveness in the industry.

** "If you follow this logic, NetEase is eager to implement the large-scale AI model, perhaps because it wants to use the large-scale model to get rid of the dilemma of single revenue structure for many years and difficulty in generating new businesses." **A person close to NetEase said.

** Can the large model pull the second curve? **

In recent years, while striving to reduce costs and increase efficiency in the general environment, NetEase is also anxious about its second growth curve.

Netease’s game business is basically stable, but games can also face new challenges; Netease Youdao has transformed, and now it has access to large models, but the imagination brought by the education industry has been limited; It's hard to pick a leader.

In NetEase’s 2023 first-quarter financial report released on May 25, the data showed that NetEase’s game and related value-added service revenue in the first quarter reached 20.1 billion yuan, a year-on-year increase of 7.6%, and the proportion of game business in total revenue increased to 80%.

Although NetEase's overall revenue seems to be a typical "good student", it also has a serious "partiality" - most of the growth comes from the game business, and other businesses are showing a downward trend.

Of the 20.1 billion revenue from the game business, online games accounted for 92.7%, and mobile games accounted for 72.3%. This is largely due to contributions from Egg Party.

As a Party Game (party game), "Egg Party" was not originally an internal heavyweight project, and it was little known at the beginning of its launch in May 2022.

It wasn't until the team transformed "Jelly Bean Man" into a "friends team up to break through the level" game, the casual social style and the easy-to-use gameplay that the game gradually attracted more young players.

In conjunction with the New Year's Eve at the end of 2022, "Egg Party" released a large number of festival activities and cross-border marketing, and this game became popular. According to NetEase, the number of daily active users of "Egg Boy Party" has exceeded 30 million, making it the game with the highest number of daily active users in the history of NetEase games.

Thanks to the contribution of "Egg Party", the gross profit of NetEase's games and related value-added services in the first quarter both increased year-on-year and quarter-on-quarter, with a gross profit margin of 66.7%, compared with 59.1% and 62.2% in the previous quarter and the same period last year.

**But how long will the popularity of "Egg Party" last? **

Qimai data shows that "Egg Party" has shown a downward trend since April this year, and once fell back to the ninth place in the free game list. However, the popularity of "Egg Party" has not diminished recently, and its ranking has risen to the first place.

**Ding Lei's goal is to make "Egg Party" as a ten-year game, but the vitality of casual games in the industry is far from that long, and the ranking fluctuation of "Egg Party" also shows that the players are not so strong stickiness. **

It is not so easy for NetEase to maintain the high popularity of "Egg Party".

In terms of client games, revenue declined for the first time in nearly a year. The main reason is that NetEase and Blizzard broke up. Among them, games such as "World of Warcraft" and "Hearthstone" are mainly client games. But fortunately, most of NetEase’s game business revenue comes from mobile games, and the impact of end games has not affected the entire game market.

Compared with the good performance of the game business, NetEase's other business sectors are still in a state of need for blood transfusion.

In the first quarter of this year, NetEase Youdao’s net income was 1.16 billion yuan, a year-on-year decrease of 3.1%. Among them, the net income of learning services was 730 million yuan, a year-on-year decrease of 11.3%; the net income of smart hardware was 210 million yuan, a year-on-year decrease of 16.0%; the net income of online marketing services was 220 million yuan, a year-on-year increase of 79.7%. The net loss in the quarter was 210 million yuan, and it turned from profit to loss again after the profit turned positive in the previous quarter.

In a word, both the learning service and the dominant smart hardware business have experienced a downward trend. Netease Youdao mentioned in its financial report that on the one hand, it is affected by the macro environment, and on the other hand, it is due to the weakening of user consumption demand.

But the more important factor is that due to the influence of the macro environment, a large number of powerful players have poured into the track of educational smart hardware and educational content services. For example, TAL launched a variety of smart hardware products in 2022, and Yuanfudao also released a new smart hardware product "Little Ape Learning Training Machine" this year.

** Next, NetEase Youdao wants to maintain a leading position in this field, obviously not as easy as before, and may even be overtaken by other players in a corner. **

NetEase Cloud Music also performed poorly in the latest quarter. In the first quarter of 2023, NetEase Cloud Music achieved revenue of 2 billion yuan, a year-on-year decrease of 5.2% and a month-on-month decrease of 17%. The same period last year and the previous quarter were 2.06 billion yuan and 2.37 billion yuan respectively.

Whether it is from the cost reduction on the cost side or the increase in the number of monthly active users and paying users, NetEase Cloud Music should not experience a decline in revenue.

In the financial report, NetEase Cloud Music gave an explanation and implemented a number of measures for live broadcast services, including reducing the display of certain live broadcast functions in the app and reducing the revenue sharing ratio of anchors and guilds, etc., making cloud music social entertainment during the reporting period Net service income decreased.

Judging from this explanation, NetEase Cloud Music’s revenue comes from the social entertainment business. Now that the functions in this area are restricted, the revenue will naturally not increase but decrease. Whether NetEase Cloud Music can achieve positive profits by paying members mainly depends on increasing users' willingness to pay. This is a long-term issue not only for NetEase Cloud, but also for the entire online music platform.

**After exploring and searching for the second curve for so many years, Netease can only rely on the game business to support the basic market. **

The emergence of large models at this time seems to be a strong starting point for Netease to improve its single revenue structure. This is also an important reason why Ding Lei emphasized the implementation of the scene.

However, judging from the reality of implementation, Netease currently uses AI technology to improve the work efficiency of key links by 90%, and through self-developed language and graphic models, it has explored game methods such as smart NPC, AI face pinching, and fashion design.

Outside of games, it seems that the boost effect of large models on other businesses has not yet appeared. Right now, the big model is still difficult to help NetEase find the second growth curve.