Core Viewpoint - Zulong Entertainment reported significant revenue growth in the first half of 2025, but still faced losses, indicating a potential for future profitability with ongoing challenges in R&D costs and overseas market expansion [1][8]. Revenue Growth and Financial Performance - In the first half of 2025, Zulong Entertainment achieved revenue of 634 million RMB, a 44.4% increase from 439 million RMB in the same period of 2024 [2][5]. - The company reported a loss of 11.7 million RMB, a substantial reduction of 91.3% compared to a loss of 134 million RMB in the previous year [1][8]. - Adjusted net loss was 7.7 million RMB, down 93.6% year-on-year [1][2]. Key Products Driving Growth - The mobile game "In the Name of the Shining" has become a star product for Zulong, achieving over 2 billion RMB in global revenue and surpassing previous years' average daily active users (DAU) in the first half of 2025 [3][4]. - New games "Dragon Tribe: Cassel's Gate" and "Treading the Wind" contributed significantly to revenue, with the former topping the iOS free charts upon release [4][6]. Market Performance and Challenges - Domestic revenue reached approximately 512 million RMB, a 68.3% increase, accounting for 80.7% of total revenue [5][6]. - Overseas revenue was 123 million RMB, a decrease of 9.5%, with its share dropping from 30.8% to 19.3% [6][8]. - The company plans to expand its successful titles into Southeast Asia and South Korea to seek overseas growth [6]. Future Outlook - The gaming industry is experiencing increased competition, with a shift from scale expansion to quality competition [8]. - Zulong's strategy of focusing on high-quality, diverse products and global expansion may lead to profitability in the second half of 2025 [8].

Core Insights - Zulong Entertainment (09990.HK) reported a significant revenue increase of 44.4% year-on-year, reaching 634 million RMB in the first half of 2025, marking the third consecutive mid-term report with growth [1][2] - Despite the revenue growth, the company incurred a loss of 11.7 million RMB, although this represents a substantial reduction of 91.3% compared to a loss of 134 million RMB in the same period last year [1][7] - Adjusted net loss was 7.7 million RMB, down 93.6% year-on-year [1][2] Revenue Growth - The revenue growth was primarily driven by the successful launch of new games "Dragon Tribe: Cassel's Gate" and "Treading the Wind," along with the stable performance of the flagship product "In the Name of Shine" [2][4] - The gross margin remained high at 71.4%, indicating efficiency in game development and operations [2] Game Performance - "In the Name of Shine" has become a star product for the company, achieving over 2 billion RMB in cumulative global revenue and surpassing previous years' average daily active users (DAU) in the first half of 2025 [3] - "Dragon Tribe: Cassel's Gate" launched in September 2024, quickly topped the iOS free charts and became a new growth point for the company [4] - "Treading the Wind," a Chinese-style RPG, also performed well upon its launch in the first half of 2025, topping the iOS free charts on its release day [4] Market Dynamics - Domestic revenue accounted for approximately 5.12 billion RMB, a 68.3% increase year-on-year, making up 80.7% of total revenue [5] - Conversely, overseas revenue decreased by 9.5% to 1.23 billion RMB, dropping its share from 30.8% to 19.3% [6] Challenges and Future Outlook - The company faces challenges including high R&D expenditures and declining overseas market revenue [8] - The gaming industry has seen user growth reaching 679 million, but competition is intensifying [8] - The company plans to expand "Dragon Tribe: Cassel's Gate" and "In the Name of Shine" into Southeast Asia and South Korea in the second half of 2025 to seek overseas growth [6][8] - The strategic focus on quality over quantity in the gaming industry may help the company transition from losses to profitability [8]

Core Viewpoint - The gaming sector is experiencing volatility, with the gaming ETF (159869) dropping over 3%, while some stocks like Jibite, Xinghui Entertainment, Shenzhou Taiyue, and Sanqi Interactive are seeing significant declines. Conversely, Guomai Culture and Huali Technology are performing well amidst this downturn [1]. Group 1: Market Performance - The gaming ETF (159869) has seen a net inflow of funds amounting to 1.005 billion yuan over the past 10 trading days, indicating strong investor interest [1]. - On September 26, the gaming sector is under pressure, with notable declines in several key stocks [1]. Group 2: Regulatory Compliance - Tencent Games announced a gaming time restriction for minors during the National Day and Mid-Autumn Festival holidays, allowing access only from 8 PM to 9 PM on specific dates [1]. - Following Tencent, NetEase also released a similar gaming time restriction for minors, showcasing the industry's proactive response to regulatory compliance [1]. Group 3: Industry Developments - The National Press and Publication Administration approved 145 domestic online games for release in September 2025, along with 11 imported games, reflecting ongoing regulatory activity in the gaming sector [1]. - The gaming sector is poised for transformation towards premium and compliant offerings, driven by multiple catalysts including AI, content, and business model innovations [1].

Core Viewpoint - The gaming industry in China has shown unexpected strong performance in 2023, with significant increases in both product performance and stock prices, driven by factors such as continuous issuance of game licenses, successful new game launches, and effective overseas market expansion [1][2]. Industry Performance - From 2017 to 2024, China's gaming market sales revenue is projected to grow from 203.6 billion yuan to 325.8 billion yuan, with a notable turnaround beginning in the second half of last year [2]. - As of September 17, the Shenwan Gaming Industry Index closed above 4000 points, marking a new high since 2017, with an approximate 80% increase year-to-date, ranking third among Shenwan's secondary industry indices [2]. - Individual stocks have performed exceptionally well, with companies like ST Huatuo and Giant Network seeing increases of over 100%, and ST Huatuo's market capitalization surpassing 140 billion yuan [2]. Factors Driving Recovery - The continuous issuance of game licenses has been a significant factor in boosting industry confidence, with 1119 licenses issued by August, a notable year-on-year increase [2][3]. - The gaming market's actual sales revenue reached 168 billion yuan in the first half of the year, a 14.08% increase year-on-year, with the user base growing to 679 million [3]. - The overseas market for self-developed games generated approximately 6.8 billion yuan in revenue, reflecting an 11% year-on-year growth [3]. Product and Market Dynamics - High-revenue products disclosed by gaming companies have bolstered investor confidence, particularly in validating the business models of mobile games and the growth potential of mini-games [4]. - The successful launch of key games, such as Giant Network's "Supernatural Action Group," has significantly contributed to stock price increases, with the game showing rapid growth in user engagement and revenue [4][6]. - The trend of gaming companies focusing on high-quality content and overseas expansion has become more pronounced, moving away from reliance on low-quality or cloned games [5][7]. Future Outlook - The gaming industry is expected to maintain its positive trajectory due to the deep accumulation of resources and capabilities by domestic gaming companies, which have enhanced their ability to produce new products [6]. - The current growth model may evolve, with a shift from quantity to quality in game releases, emphasizing long-term operational capabilities and market insight [7].

Core Insights - The domestic gaming industry in China has shown a strong recovery in the first half of the year, with actual sales revenue reaching 168 billion yuan, a year-on-year increase of 14.08% [1] - The number of gaming users has also reached a historical high of 679 million, growing by 0.72% year-on-year [1] - The issuance of gaming licenses remains high, with 766 domestic online games approved in the first half of the year, a 21.97% increase compared to the same period in 2024 [2] Industry Performance - The gaming market is entering a phase of stock competition, with a significant disparity between companies holding popular products and those facing revenue pressures [2] - Among A-share and Hong Kong-listed gaming companies, 10 reported declines in both revenue and profit, while several others faced revenue declines or "increased revenue without increased profit" [2] Company Performance - Century Huatong leads the A-share gaming companies with a revenue of 17.2 billion yuan, up 85.5%, and a net profit of 2.656 billion yuan, up 129.33% [7] - Tencent and NetEase continue to dominate the market, with Tencent's domestic gaming revenue at 83.3 billion yuan and NetEase's at 51.6 billion yuan in the first half of the year [5] - 37 Interactive Entertainment reported a revenue decline of 8.08% to 8.486 billion yuan, but its net profit increased by 10.72% to 1.4 billion yuan [9][10] - Perfect World achieved a revenue of 3.691 billion yuan, a 33.74% increase, and turned a profit with a net profit of 503 million yuan [15][17] - Kunlun Wanwei's revenue reached 3.733 billion yuan, a 49.23% increase, but it reported a net loss of 856 million yuan [14] - G-bits reported a revenue of 2.518 billion yuan, up 28.49%, and a net profit of 645 million yuan, up 24.5% [18] Market Trends - The gaming industry is shifting towards high-quality game development and international expansion, moving away from imitation and low-quality products [4] - Companies are focusing on cost reduction and efficiency improvements to enhance profitability amid rising sales costs and market competition [18]

Industry Overview - The domestic gaming industry in China showed a strong recovery in the first half of the year, with actual sales revenue reaching 168 billion yuan, a year-on-year increase of 14.08%, marking a new high [1] - The number of gaming users reached nearly 679 million, a year-on-year growth of 0.72%, also a historical peak [1] - The issuance of gaming licenses remained high, with 766 domestic online games receiving licenses in the first half of the year, a 21.97% increase compared to the same period in 2024 [2] Market Competition - The gaming market has entered a phase of stock competition, with a growing disparity between companies holding popular products and those facing revenue pressures [2] - Among A-share and Hong Kong-listed gaming companies, 10 reported declines in both revenue and profit, while several others faced year-on-year revenue declines or "increased revenue without increased profit" [2] Company Performance - Century Huatong led the A-share gaming companies with a revenue of 17.2 billion yuan, up 85.5% year-on-year, and a net profit of 2.656 billion yuan, up 129.33% [7] - Tencent and NetEase continued to dominate the gaming market, with Tencent's domestic gaming revenue reaching 83.3 billion yuan and NetEase's gaming revenue at 51.6 billion yuan in the first half of the year [6] - 37 Interactive Entertainment reported a revenue of 8.486 billion yuan, down 8.08% year-on-year, but its net profit increased by 10.72% to 1.4 billion yuan [11] - Perfect World achieved a revenue of 3.691 billion yuan, up 33.74%, and turned a profit with a net profit of 503 million yuan [17] Cost Management and Strategy - Companies are focusing on cost management and efficiency improvements to counteract rising sales costs and the peak of user acquisition benefits [3][17] - Perfect World and G-bits have implemented strategies to reduce costs significantly, with G-bits' sales expenses halving, contributing to their profitability [17][18] - The gaming industry is shifting towards high-quality game development and international expansion, moving away from the previous reliance on imitation and low-quality games [4] Challenges and Future Outlook - Companies face challenges in product lifecycle management, with several major titles reaching maturity and new releases not yet stabilizing [13][15] - The need for continuous innovation and the development of new hit games is critical for maintaining market position and profitability [15][18]

Core Viewpoint - The summer gaming season of 2025 is expected to be highly competitive, with a record number of new game releases and significant industry changes driving this intense environment [2][4]. Group 1: Game Releases and Competition - A total of 26 new games are scheduled for release in July, along with 15 limited tests, marking one of the most competitive summer seasons in history [2]. - Tencent plans to launch two new games: the eco-friendly casual game "Carbon Island" on July 2 and the multiplayer RPG "Star Resonance" on July 17 [2]. - NetEase is set to release the highly anticipated PC game "No Master Star Abyss" on July 17, which has already gained significant attention by topping the global trial rankings during a recent Steam event [2]. Group 2: Regulatory Environment and Market Growth - The issuance of game licenses has significantly increased, with 158 games approved in June alone, marking a peak for the year and the highest monthly total since 2003 [5]. - From the beginning of the year to June, 757 domestic games and 55 imported games have received approval, indicating a trend towards regular issuance of licenses that supports industry growth [6]. - The Chinese gaming market showed a positive growth trend, with a market size of 28.051 billion yuan in May 2025, reflecting a year-on-year increase of 9.86% [6]. Group 3: International Expansion and Challenges - The global mobile gaming market is projected to reach 635.57 billion yuan in 2024, with Chinese mobile games accounting for 37.5% of the market, up from 32% in previous years [8]. - However, competition in overseas markets is intensifying, with companies like NetEase making significant cuts to their international operations, including layoffs in Japan and North America [8][9]. - Regulatory changes, such as the FTC's fine against miHoYo for its game "Genshin Impact," have added uncertainty to the industry, impacting revenue and market positioning [9][11]. Group 4: Domestic Market Dynamics - Despite the challenges in international markets, the domestic gaming market continues to show potential, with a focus on high-quality content leading to successful titles like "Honor of Kings" maintaining top revenue positions globally [15]. - The competitive landscape remains fierce, with companies needing to adapt their strategies to thrive in both domestic and international arenas, emphasizing the importance of quality and innovation [14][15].

Core Viewpoint - The Chinese gaming industry, which experienced rapid growth before 2020, is now at a crossroads as it faces a slowdown in growth. However, there are signs of potential new growth driven by increased game approvals and supportive government policies [1][4]. Group 1: Game Approval Trends - The National Press and Publication Administration reported a record high of 147 new domestic online games approved in June 2025, indicating a sustained high level of game approvals in recent years [1]. - In 2024, the monthly issuance of domestic game licenses consistently exceeded 100, except for April and May, reflecting a robust approval process [1]. Group 2: Market Growth and Financial Data - In May 2025, the Chinese gaming market reached a scale of 280.51 billion yuan, marking a year-on-year growth of 9.86% and a month-on-month increase of 2.56% [3]. - The client game market size was 58.19 billion yuan, with a year-on-year growth of 1.58% and a month-on-month growth of 0.34% [3]. - The mobile game market size was 211.77 billion yuan, showing a year-on-year growth of 11.96% and a month-on-month growth of 3.69% [3]. Group 3: Government Support and Policies - Various regions, including Beijing, Shanghai, Guangdong, and Zhejiang, have introduced subsidies and measures to support high-quality game projects and original creations [3]. - Beijing's policy includes rewards of up to 5 million yuan for game development and operation companies [3]. - Zhejiang's measures aim to optimize game export processes and enhance international compliance, indicating a focus on expanding the global reach of Chinese games [3]. Group 4: Industry Trends and Future Outlook - The sustained high number of game approvals reflects a trend towards the production of high-quality games, with an increased likelihood of passing the approval process [5]. - The rise of casual and puzzle games, particularly after the success of titles like "Party of Eggs," indicates a shift in industry focus towards more engaging and innovative game types [9][10]. - The gaming industry is expected to enter a new phase of rapid growth over the next decade, driven by both domestic and international market opportunities [4][17].

Core Viewpoint - Guangdong Province is promoting high-quality development in the gaming industry through a set of policy measures aimed at addressing current challenges and fostering innovation and collaboration within the sector [1][2]. Group 1: Policy Measures - The newly released measures focus on supporting original and high-quality games, encouraging the integration of traditional Chinese culture and modern trends into game development [2][3]. - Financial incentives include a one-time support reward of up to 5 million yuan for projects with significant cultural and social impact, as well as technological breakthroughs [2][3]. - The measures aim to enhance administrative efficiency and streamline processes for game companies, particularly benefiting small and medium-sized enterprises [5][6]. Group 2: Industry Trends - The gaming market is witnessing a shift towards both heavy and light game products, with an emphasis on creativity and player experience rather than solely on high investment [3][4]. - The mini-game segment in Guangdong is projected to reach a revenue of 26.292 billion yuan in 2024, marking a year-on-year growth of 119.1% and accounting for 66% of the national mini-game revenue [4]. Group 3: Ecosystem Development - The measures encourage the creation of an integrated industry ecosystem, promoting collaboration between gaming and other sectors such as tourism, manufacturing, and new consumption [6][7]. - Guangdong aims to establish authoritative third-party platforms for accurate game data statistics and rankings, enhancing the credibility of industry information [7][8]. - The focus on building a supportive environment for both large and small game developers is expected to foster innovation and high-quality development across the industry [5][8].

Core Insights - The consensus in the gaming industry is that "going global" is essential for survival, with 33 Chinese companies entering the global mobile game publisher revenue top 100 in April, generating a total of $2 billion, accounting for 38.4% of the top 100's revenue [1][3] - Tencent's "Honor of Kings" saw a 71% revenue increase, reclaiming the top spot in global mobile game revenue, contributing to a 10% rise in Tencent's mobile gaming revenue [1] - The trend of Chinese gaming companies focusing on overseas markets is evident, with companies like Century Huatong and 37 Interactive Entertainment leading in revenue growth, while many A-share companies experienced revenue declines [3][5] Industry Performance - The actual sales revenue of China's self-developed games in the domestic market for 2024 is projected to be 260.736 billion yuan, a year-on-year growth of 1.7%, indicating a slowdown [5] - The overseas market for self-developed games reached $18.557 billion in 2024, with a year-on-year growth of 13.39%, marking a continuous five-year trend of exceeding 100 billion yuan [5] - Century Huatong's overseas business revenue reached 11.367 billion yuan in 2024, accounting for 50.26% of its total revenue, highlighting the importance of international markets for revenue growth [5] Market Trends - The gaming industry is witnessing a shift towards high-quality game exports, with major players like Tencent and NetEase leading the charge to enhance China's global gaming influence [7] - A significant number of A-share gaming companies are experiencing revenue declines, but those heavily invested in overseas markets, such as 37 Interactive Entertainment and Century Huatong, are performing well [3][7] - The current landscape for Chinese games going global is characterized by a focus on mobile and casual games, capital investments, and breakthroughs in higher-end gaming technologies like VR and AI [9][10]