Core Insights - The application of AI in the gaming industry is rapidly evolving, with independent developers leveraging AI tools to bring their ideas to life, indicating a shift in how games are developed and created [1][3] - The current AI wave is seen as a transformative opportunity, moving from a phase of hype to one of practical application and commercialization [3][4] Industry Trends - The AI industry in China is experiencing significant activity, with companies like Zhiyu and MiniMax successfully listing in Hong Kong, outperforming market expectations [3] - The AGI-Next conference highlighted the advancements in AI, with discussions indicating that China's AI capabilities in commercial applications and engineering design may surpass those of the U.S. [3][4] AI Applications in Gaming - The integration of AI in gaming can be categorized into two types: AI for Game, which enhances the workflow of game development teams, and AI in Game, which directly influences gameplay [4][5] - Tencent's VISVISE, an AI-driven 3D character animation pipeline, exemplifies the efficiency gains possible with AI, reducing the time for skinning from 1-3.5 days to under 5 minutes [4][5] Developer Insights - Many game developers are moving beyond using AI as a mere asset generation tool, instead allowing it to influence game design and development processes [6][7] - A report indicates that 86.36% of game companies in China are utilizing AI in their development processes, showcasing widespread adoption [7] Competitive Landscape - Chinese game developers are reportedly advancing faster in AI applications compared to their Western counterparts, who are often more cautious due to concerns about originality and the impact of AI on creativity [16][18] - The preference for rapid iteration and long-term operational models in China allows for more agile integration of AI technologies into games [18][20] Future Directions - AI NPCs are emerging as a key area of focus, with potential to enhance player experiences by making NPC interactions more dynamic and engaging [21][24] - The development of AI NPCs can address common player complaints about static and repetitive NPC behaviors, thereby improving overall gameplay [24][25] Conclusion - The gaming industry is positioned as a critical testing ground for AI technologies, with the potential for significant advancements in both game development and player experience [42][44] - As AI continues to evolve, its integration into gaming is expected to drive innovation and create new gameplay experiences, making it a competitive frontier for companies [41][44]

Investment Rating - The industry rating is "Outperform the Market," indicating that the overall return of the industry is expected to exceed the market benchmark index by more than 5% in the next 6 months [17]. Core Insights - The report highlights significant advancements in AI gaming, particularly with the introduction of playable AI NPCs by Ubisoft, which allows players to interact with AI teammates in a dynamic gaming environment [3]. - The emergence of commercial products based on AI world models, such as Marble by World Labs and Tencent's mixed reality model, showcases the potential for creating immersive 3D worlds using generative AI [4]. - The development of AI game creation tools, like YouTube's Playables Builder, is democratizing game development by enabling users to create games without programming knowledge [4][5]. Summary by Sections AI NPC Development - Ubisoft launched a playable demo of AI NPCs named "Teammates," where players can command AI teammates using natural language, powered by Google's Gemini and Ubisoft's middleware [3]. AI World Models - Companies like Google DeepMind and Tencent are advancing in AI world models, with Tencent's mixed reality model allowing users to create interactive worlds from text or images [4]. AI Game Creation Tools - YouTube is testing an AI game creation tool, Playables Builder, which allows users to create games using simple text and media inputs, currently in testing phases in select markets [4]. - The AI game creation platform SOON by Kaiying Network integrates generative AI to streamline complex game development processes, significantly lowering technical barriers and costs [5]. Investment Recommendations - The report suggests focusing on companies related to gaming, including Tencent, NetEase, Bilibili, Giant Network, and others, as potential investment opportunities [6].