Core Viewpoint - Nomura's report indicates that NetEase's total revenue for the last quarter is expected to grow by 4% year-on-year to 27.7 billion yuan, which is 4% lower than the latest market forecast [1] Revenue Summary - Online gaming revenue is projected to be 21.7 billion yuan, reflecting a year-on-year increase of 5.8% but a quarter-on-quarter decline of 5% [1] Profitability Metrics - The deferred revenue is expected to remain resilient; gross margin is anticipated to increase by 3.3 percentage points year-on-year to 64.2% [1] - The gross margin for the online gaming business may continue to expand, with a year-on-year growth of 3 percentage points to 69.6% [1] - GAAP operating margin is expected to rise by 0.2 percentage points to 29.4% [1] - Non-GAAP net profit is projected to decline by 16% to 8.1 billion yuan [1] Investment Rating - Nomura maintains a "Buy" rating for NetEase's U.S. stock and continues to set a target price of $160 [1]

Military and Geopolitical Developments - The US Central Command announced that the Ninth Air Force will conduct air force readiness exercises in the Middle East, aimed at enhancing rapid deployment capabilities [2] - The USS Abraham Lincoln Carrier Strike Group has entered the Middle East, and the US has informed Israel about military preparations against Iran, expected to be completed within two weeks [2] - Iran's Revolutionary Guard Navy officials stated they have achieved real-time monitoring of the Strait of Hormuz and are prepared for any potential conflict, asserting they do not seek war but are ready for a response [2] Financial Markets Overview - US stock markets showed mixed results, with the Dow Jones down 0.83%, while the Nasdaq rose by 0.91% and the S&P 500 increased by 0.41% [3] - Major tech stocks mostly rose, with Amazon up 2.63%, Microsoft up 2.19%, and Apple up 1.12%, while Tesla fell nearly 1% [3] - The Nasdaq Golden Dragon China Index increased by 0.48%, with mixed performances among popular Chinese stocks [3] Commodity Prices - International oil prices rose, with WTI crude oil futures closing at $62.57 per barrel, up 3.20%, and Brent crude oil futures at $66.70 per barrel, up 2.98% [3] - Spot gold increased by 3.45%, reaching $5,181.04 per ounce, with a peak at $5,190.06, marking a historical high [3] - Spot silver rose by 7.97%, priced at $112.14 per ounce [3] Currency and Exchange Rates - The US Dollar Index fell to 95.775, hitting a low of 95.510, the lowest since early 2022 [4] - The offshore RMB was quoted at 6.9321, while the onshore RMB was at 6.9545 [5] Corporate Announcements - Anta Sports announced plans to acquire a 29.06% stake in Puma for €15.06 billion (approximately 123 billion RMB), aiming to become its largest shareholder [15] - Micron Technology plans to invest $24 billion in Singapore over the next decade to expand NAND flash memory production, creating approximately 1,600 jobs [16] - DeepSeek launched a new AI model, DeepSeek-OCR 2, which can interpret images in a human-like logical sequence, enhancing its visual understanding capabilities [13]

Market Overview - The Nasdaq China Golden Dragon Index (HXC) increased by 0.48% on January 28 [1] - The Dow Jones Industrial Average fell by 408.99 points, a decrease of 0.83%, closing at 49,003.41 points [9] - The S&P 500 Index reached a new intraday high of 6,988.82 points [10] - The Nasdaq Composite Index rose by 215.74 points, an increase of 0.91%, closing at 23,817.10 points [9] Gainers in Chinese Concept Stocks - TSMC rose by 1.67%, Alibaba increased by 0.78%, and Baidu gained 1.00% [1] - Notable gainers included: - Lianhua Electronics up 10.24% - Bilibili up 3.43% - NIO up 0.76% [1][9] Losers in Chinese Concept Stocks - Notable decliners included: - NetEase down 0.68% - JD.com down 0.94% - Ctrip down 2.39% [9] - Other significant losses were seen in: - Li Auto down 1.12% - Xpeng down 1.09% [9] Notable Stock Movements - The top gainers included: - Huya up 19.33% - Suxuan Hall up 23.97% - Wisdom Infinite up 31.25% [3][13] - The top decliners included: - Fanhua Financial down 11.42% - China Natural Resources down 9.38% [7][15]

Core Insights - The National Press and Publication Administration announced the approval of 182 game licenses in January 2026, including 177 domestic and 5 imported games, maintaining a relatively high issuance level [1] - In 2025, a total of 1,771 game licenses were issued, significantly surpassing the 1,416 licenses in 2024, marking the highest issuance since 2019 [1] - Major companies such as Tencent, NetEase, and others received approvals for key products, including Tencent's "Rainbow Six: Siege" and NetEase's "Yao Yao Chess" [1] Group 1 - The January 2026 approvals included significant titles from major gaming companies, indicating a robust market for both domestic and imported games [1] - Tencent's "Rainbow Six: Siege" is a tactical shooter developed by Ubisoft and is part of Tencent's strategy to enhance its gaming portfolio through partnerships [2][4] - The approval of "Angry Birds: Classic Return" and "Angry Birds: Dream Blast" by Kingsoft's subsidiary marks a strategic partnership aimed at reintroducing the franchise to the Chinese market [4] Group 2 - Tencent's investment of €1.16 billion in Ubisoft's subsidiary Vantage Studios grants it a 26.32% stake, integrating key IPs like "Assassin's Creed" and "Rainbow Six," which helps alleviate Ubisoft's financial pressure [4] - The "Rainbow Six: Siege" team is focused on creating a fair competitive environment and enhancing local services for the Chinese market, indicating a commitment to localization and community engagement [4] - Kingsoft's strategic partnership with Rovio aims to facilitate the exclusive distribution and operation of the "Angry Birds" series in China, highlighting the importance of collaboration in the gaming industry [4]

Group 1 - The game "Yao Yao Qi" has been approved for publication by the National Press and Publication Administration, with approval number Guo Xin Chu Shen [2026] 241, on January 23, 2026 [1] - The publishing unit for the game is Zhejiang Publishing Group Digital Media Co., Ltd., while the operating unit is Hangzhou NetEase Leihuo Technology Co., Ltd. [1] - Hangzhou NetEase Leihuo Technology Co., Ltd. was established in 2009 and is located in Hangzhou, with a registered capital of 10 million RMB and paid-in capital of 10 million RMB [1] Group 2 - The company has made investments in 21 enterprises and participated in 11 bidding projects [1] - It holds 41 trademark registrations and has obtained 20 administrative licenses [1]

Core Insights - The Chinese internet advertising industry has transitioned from a phase of "incremental traffic acquisition" to a focus on "efficiency extraction from existing resources" [1][2] - The new rule emerging from this differentiation is that technology determines efficiency, efficiency drives revenue, and ecosystem shapes the landscape [2] Group 1: Advertising Revenue Performance - Alibaba's advertising revenue for Q3 2025 reached 789.27 billion yuan, a 10% year-on-year increase and a slight 2.1% quarter-on-quarter growth, maintaining its leading position in the industry [5] - Pinduoduo's online marketing service revenue was 533.48 billion yuan, an 8% year-on-year increase but a 1.2% quarter-on-quarter decline, indicating a strategic focus on long-term ecosystem development [6][7] - Tencent's marketing service revenue grew by 21% to 362 billion yuan, showcasing the effectiveness of its technology-driven approach [7][8] - JD.com's market and marketing revenue increased by 23.7% to 256.88 billion yuan, driven by the growth of its food delivery business and AI-enabled advertising solutions [10] - Bilibili's advertising revenue reached 25.7 billion yuan, with a 23% year-on-year growth, attributed to the maturation of its user base [11] Group 2: Challenges Faced by Mid-Tier Platforms - Baidu's online marketing revenue fell by 18.6% to 153 billion yuan, primarily due to budget cuts from advertisers and the restructuring of search scenarios by AI [12][14] - Zhihu's advertising revenue declined by 26.19%, reflecting a mismatch between its high-knowledge user base and consumer conversion needs [15] - Automotive media service revenue for Che168 dropped by 8.59%, as traditional advertising models struggle against the evolving strategies of new energy vehicle companies [16] Group 3: Industry Trends and Future Outlook - The differentiation in advertising revenue among internet companies in Q3 2025 signifies a reconstruction of internet marketing value logic, focusing on traffic depth, transaction closure, and technology adaptation [16] - Platforms achieving growth typically exhibit a combination of extensive traffic, ecosystem closure, and deep integration of AI technology, while declining platforms often lack these comprehensive advantages [16] - The future of internet marketing will prioritize platforms that can achieve ecosystem synergy, embedded technology, and full-link value delivery, moving away from traditional single-channel models [16]

Group 1 - The core viewpoint is that ByteDance's entertainment app is driving significant growth in the domestic entertainment market, with a focus on the integration effects of other major companies' platforms [1][2] - The fastest growth areas are video (short dramas), reading (AI audiobooks), and music, driven by AIGC and AI algorithms, with ByteDance enhancing its market share through the integration of AI and copyright capabilities [2] - The gaming sector is expected to see a substantial supply of new products by 2026, with a competitive landscape similar to that of 2024, while older games with high DAU remain stable [3] Group 2 - Short dramas and comic dramas are anticipated to benefit significantly from AI advancements, with full-stack production tools shifting the production focus from technical personnel to content creators by 2026 [4] - Companies with upstream novel IP reserves and accumulated traffic are likely to achieve excess returns in the long term [4] - Investment recommendations include focusing on platform-type companies in the entertainment sector that will gain excess benefits from AI-enhanced production capabilities [5]

Core Insights - ByteDance's AI product Doubao has surpassed 100 million daily active users, becoming the first AI application in China to achieve this milestone [1] - The music app Soda Music has reached nearly 140 million monthly active users, ranking fourth in the industry, driven by ByteDance's traffic ecosystem [1][3] - Soda Music's user growth is significant, with a year-on-year increase of 90.7% in September 2025, while other platforms are experiencing user declines or minimal growth [2][3] Group 1: User Growth and Market Position - Soda Music's monthly active users increased from over 70 million to 130 million in one year, and then to nearly 140 million in just one month [2] - The app has become the third in daily active users, surpassing NetEase Cloud Music [3] - 82.1% of Soda Music's users in June 2025 came from Douyin, highlighting the importance of Douyin as a traffic source [3] Group 2: Business Model and User Demographics - Soda Music employs a free model that attracts a broad user base, allowing users to listen for free by watching ads, similar to the model used by the successful product Hongguo [3][4] - The app targets younger users aged 18-30, while another app, Tomato Music, focuses on older demographics, indicating a strategy to cover a wide age range [6][7] - Soda Music's user base is primarily composed of users from lower-tier cities, with over 50% of users being from third-tier cities and below [7] Group 3: Competitive Landscape and Industry Challenges - Despite rapid growth, Soda Music's library of 50 million songs is significantly smaller than Tencent Music's 260 million songs, which includes exclusive rights to many top artists [8] - Industry experts believe that while Soda Music could reach 200 million monthly active users, it is unlikely to surpass Tencent Music or NetEase Cloud Music in market dominance [8][9] - The music industry is facing challenges with declining revenues for artists and increasing promotional costs, which may impact the long-term sustainability of platforms like Soda Music [10]

Core Insights - The National Press and Publication Administration announced the approval of 177 domestic games and 5 imported games in January 2026, indicating a significant activity in the gaming industry [1][2][4]. Domestic Game Approvals - A total of 177 domestic games received approval, with 175 categorized as "mobile" games, including 64 in the "mobile-casual puzzle" category. Only 2 games were approved in the "client" category, while no approvals were granted for "web" or "console" categories this month [2]. - Notably, 10 games received both mobile and client approvals, highlighting a trend towards multi-platform availability [2]. - In 2025, the total number of domestic game approvals was 1,676, with 96 imported games and 86 changes in game approvals. The 177 approvals this month represent the second-highest monthly total in the past year [2]. Imported Game Approvals - Five imported games were approved this month, with an average of 8 imported games receiving approval monthly over the past year [4]. Notable Games and Changes - Prominent domestic games approved include titles from well-known companies such as NetEase's "Yao Yao Qi," 37 Interactive's "Douluo Dalu: Qicheng," and Giant's "Yue Yuan Zhi Ye: Da Shi Dui Yi" [6]. - The approved imported games include Tencent's "Rainbow Six: Siege" and two titles from Kingsoft's "Angry Birds" series [7]. - A name change was noted for NetEase's game "Endless Lagrange," which has been renamed to "Interstellar Hunter" [8].

Core Insights - The female-oriented gaming market is projected to reach 8 billion yuan in 2024, reflecting a year-on-year growth of 124.1%, significantly outpacing the industry average [1] - Despite the market potential, internal challenges persist, including high player expectations for visual effects, sensitivity to public opinion, and stringent quality demands for game narratives [1] - There is a disconnect between market perception and capital investment, with many publishers lacking specialization in female-oriented games, leading to difficulties in finding suitable partnerships [1] Market Performance - In 2025, 24 female-oriented games entered the iOS top 600, generating approximately 2.731 billion yuan in revenue, with 15 games making it to the top 200, accounting for only 4.79% of the total revenue of the top 200 [3] - "恋与深空" (Love and Deep Space) emerged as the biggest winner, expected to exceed 1.33 billion yuan in iOS revenue, capturing nearly half of the total revenue from the 24 games [3][5] - The game "我的花园世界" (My Garden World) launched in August 2025, quickly rose to the third position in revenue, showcasing the potential for new entrants in a competitive market [5] Company Revenue Distribution - The leading company, 叠纸 (Paper Games), generated 1.687 billion yuan in revenue, holding a 61.77% market share among the analyzed games [12] - Other notable companies include 网易 (NetEase) with 206.66 million yuan (7.57%) and 腾讯 (Tencent) with 200.22 million yuan (7.33%) [12] - The dominance of 叠纸 is attributed to its successful titles, including "恋与深空" and "无限暖暖" (Infinite Warmth) [12] User Engagement Metrics - "恋与深空" also leads in daily active users (DAU), capturing 48.64% of the DAU share among the top games [15] - The DAU rankings indicate that older games like "奇迹暖暖" (Miracle Warmth) and "偶像梦幻祭2" (Idol Dream Festival 2) still maintain significant user engagement, suggesting opportunities in niche markets [16] International Market Opportunities - In the overseas market, "浪漫餐厅" (Romantic Restaurant) generated approximately 4.543 billion yuan in revenue, accounting for 44.34% of the total revenue from the top female-oriented games [18] - The game "Tasty Travels: Merge Game" has shown promising growth, recently climbing to the top 30 in the U.S. iOS revenue rankings [23][25] - The overall market for casual games remains expansive, with significant revenue potential for companies like 柠檬微趣 (Lemon Microfun) [30] Emerging Trends - The rise of AI-driven emotional companionship products is anticipated to reshape the female-oriented gaming landscape, with several companies exploring this avenue [32][34] - Major internet companies are also investing in AI social companionship products, indicating a trend towards integrating AI into gaming experiences [36] - The female-oriented market is entering a stable phase post-restructuring, with expectations for a new wave of growth driven by AI companionship products in the next 1-2 years [38]