Core Insights - The company, Finger Fun (06860.HK), reported a concerning performance for the first half of 2025, facing significant challenges including revenue decline, profit halving, and user attrition, highlighting the survival pressure on mid-sized firms in the gaming industry amid a trend towards premium and leading titles [1][2] Financial Performance - The company achieved a revenue of 212 million yuan, a dramatic year-on-year drop of 35.5%, compared to the full-year revenue of 609 million yuan in 2024 [1] - Net profit for the company was only 4.367 million yuan, down 52.38% year-on-year, significantly lower than the full-year net profit of 32.8 million yuan in 2024 [1] - Other financial indicators worsened, with gross profit declining to 116 million yuan and administrative expenses rising to 24.907 million yuan, reflecting a notable increase [1] - Research and development expenses increased to 39.717 million yuan, but the effectiveness of this investment has yet to be realized [1] User Engagement - The average monthly active users decreased to approximately 1.4 million, a staggering decline of about 73.0% compared to the same period last year [1][2] - Despite a stable growth in total registered users, which reached approximately 264.9 million (up about 3.8% year-on-year), the active user engagement has sharply declined, indicating a significant drop in user conversion ability [2] Product Lifecycle and Strategy - The company's business crisis is primarily attributed to the decline of classic games and a lack of new hit titles, with major products like "Tank Frontline" and "Starry Fate" entering the late maturity phase of their lifecycle [2][3] - The company has made strategic adjustments by significantly reducing marketing expenses to 53.3 million yuan, a decrease of 64.8% year-on-year, which has helped control costs but also led to reduced user acquisition and promotional activities [3] Market Context - The overall gaming market in China saw record sales revenue of 168 billion yuan in the first half of 2025, a year-on-year increase of 14.08%, with the mobile gaming sector achieving 125.309 billion yuan, up 16.55% [3][4] - This juxtaposition of overall market growth against individual company decline reflects a trend where leading firms gain more market share while smaller firms face increased survival pressure [4] Historical Issues - The company's current predicament is partly due to historical burdens, including regulatory actions taken by the Hong Kong Securities and Futures Commission against the company and its former directors for improper conduct [4][5] - Mismanagement of funds, including the use of 46% of the net proceeds from the IPO for non-listed wealth management products, has led to significant financial losses and distracted management from core business development [5]