CMGE(HK:00302) Hua Er Jie Jian Wen·2025-08-02 08:30Core Viewpoint - The gaming industry is undergoing significant scrutiny and internal investigations, highlighted by the corruption case involving a senior executive at Zhongyou Mobile, which has led to a sharp decline in the company's stock price and financial performance [1][4][5]. Group 1: Company Developments - Zhongyou Mobile's internal corruption report revealed that Jiang Haitao, the former general manager of the Man Tian Xing studio, was detained for serious job-related crimes [1]. - The game "Xian Jian World," developed under Jiang's leadership, initially showed promise but quickly fell in rankings and received poor player reviews, leading to disappointing revenue of only 1.25 million yuan in its first week despite over 300 million yuan invested in development [2][3]. - Following the corruption allegations, Zhongyou Mobile's stock price dropped by 5.56%, with a total market value of 1.528 billion HKD, reflecting a decline of over 30% year-to-date [4]. Group 2: Industry Context - The gaming industry is experiencing a wave of internal purges, with companies like Perfect World and Bilibili also taking action against executives involved in misconduct [6][7]. - The reliance on outsourcing in the gaming sector, where art and special effects outsourcing can account for 30%-50% of total development costs, raises concerns about management's ability to control costs and prevent misuse of power [7].