Core Viewpoint - Goldman Sachs maintains a buy rating on Bilibili and updates its forecasts following the company's Q1 2025 earnings release and non-deal roadshow [1] Group 1: Gaming Business - Goldman Sachs expresses optimism about Bilibili's gaming business, particularly with the unexpected relaunch of the game "Shining! Yujun Girl" on May 22, 2023, after a long suspension, estimating annual revenue of 500 million RMB for the game [2] - The upcoming anniversary celebration for "Romance of the Three Kingdoms: Fantasy Continent" is expected to act as a catalyst for improved performance, with significant gameplay changes planned for the new S8 season [2][5] - Management indicates that the revenue from the seventh season of "Romance of the Three Kingdoms: Fantasy Continent" remained stable compared to the sixth season, with expectations for improvement in the eighth season due to enhanced monetization and new gameplay [5] Group 2: Advertising Business - Bilibili continues to be one of the faster-growing platforms in China's advertising market, with significant potential for monetization through increased ad load and effective cost per thousand impressions (eCPM) [2] - The top five advertising sectors in Q1 2025 were games, internet services (including AI), e-commerce, digital appliances, and automotive [12] - Effective advertising saw the fastest growth in Q1 2025, increasing by 30-40% year-over-year, now accounting for over 50% of total ad revenue [13] Group 3: Financial Flexibility and Profitability - Following the earnings release, Bilibili completed a $690 million convertible bond issuance and a $100 million stock buyback, which may enhance financial flexibility and support future investments in game studios [3] - Management aims for a long-term gross margin of 40-45% and an adjusted operating margin of 15-20%, focusing on a favorable revenue structure and operational leverage [15] - The gaming business is expected to achieve a comprehensive gross margin of 60-70%, while the advertising business is projected to maintain a gross margin above 60% [15][16]

Group 1: Cultural and Digital Innovation - The 21st Cultural Expo showcased Guangzhou's cultural industry through six major exhibition areas, emphasizing digital culture and local enterprises [1][2] - Various companies focused on technology empowering the cultural industry, with some exploring vertical niches like short video exports and anime IP development [1][2] Group 2: Gaming Industry Growth - Guangzhou's gaming industry is projected to generate approximately 140 billion yuan in revenue in 2024, accounting for about one-third of the national total [3] - Nine gaming companies from Guangzhou were recognized as "National Cultural Export Key Enterprises," with overseas revenue exceeding 19 billion yuan [3] - Companies like 37 Interactive Entertainment have expanded globally, with 57.22 billion yuan in overseas business revenue projected for 2024, representing nearly 33% of total revenue [3] Group 3: AI and Education Technology - Companies like Yundie Technology showcased AI-integrated hardware, such as an AI mouse and smart pen, aimed at enhancing educational experiences [4][5] - The AI mouse features voice input and real-time translation capabilities, while the smart pen captures handwritten notes for digital storage [5] - Vision Source has developed a comprehensive AI strategy, investing over 1.5 billion yuan in R&D for 2024, with a focus on educational and meeting applications [6] Group 4: Policy Support for Cultural Industry - Guangdong introduced a policy package to promote high-quality development in the cultural industry, particularly benefiting the gaming sector [7] - The policy encourages original content creation and the integration of cultural elements into gaming, enhancing global competitiveness [7] - Companies like NetEase are leveraging these policies to deepen cultural integration in their products and improve user engagement [7] Group 5: Cultural Integration in Gaming - 37 Interactive Entertainment is focusing on integrating traditional culture into gaming, using elements from Chinese history and art to enhance gameplay [8][9] - The company plans to utilize AI technology to innovate the presentation of traditional cultural elements, aiming to create globally influential cultural IPs [9]

Core Viewpoint - The release of "Three Kingdoms Fantasy Continent 2: Song of the Heroes" has faced a rapid decline in reputation within a week, despite a strong initial performance on the iOS free game chart [1][3]. Performance Summary - "Song of the Heroes" debuted at the top of the iOS free game chart but fell to 36th place by May 23, and briefly entered the Top 10 of the revenue chart before dropping out of the top 20 [3][5]. - The game's rating on TapTap plummeted to 5.3, with a significant number of one-star reviews, indicating a poor reception among players [3]. Comparison with Predecessor - The predecessor, "Three Kingdoms Fantasy Continent," launched in 2020 and consistently ranked in the top 10, ultimately generating over 10 billion in revenue, establishing itself as a phenomenon in the card game genre [5]. - In contrast, "Song of the Heroes" has struggled to maintain a competitive position, being compared unfavorably to lesser-known games [5]. Artistic and Gameplay Changes - The project team acknowledged the importance of art style in attracting players, noting that the original game's aesthetic successfully drew in a diverse user base [6]. - The sequel has undergone significant changes in art style, moving away from the previous aesthetic that appealed to many players, which may alienate existing fans while attempting to attract new ones [10][12]. Narrative and User Experience - The narrative approach in "Song of the Heroes" has been criticized for lacking depth and failing to engage players, with a focus on a "camera-like" character perspective that diminishes player involvement [10][12]. - The storyline has been described as superficial, with the game failing to effectively utilize the Three Kingdoms backdrop, leading to dissatisfaction among players [12]. Company Background and Future Outlook - Lingxi Interactive Entertainment, a subsidiary of Alibaba, has seen mixed results in its gaming ventures, with internal criticisms regarding its cultural alignment with Alibaba's broader goals [16][18]. - The company aims to become the third-largest game company in China within eight years, but the poor reception of "Song of the Heroes" poses significant challenges to achieving this goal [18].

Group 1: Cultural Industry Overview - The 21st Shenzhen Cultural Industries Fair showcased Guangzhou's vibrant cultural industry, featuring six major exhibition areas including original animation, performing arts, gaming, and cultural tourism [2] - In 2024, Guangzhou's gaming industry is projected to generate approximately 140 billion yuan, accounting for about one-third of the national total, with significant international success [4] Group 2: Gaming Sector Highlights - The gaming and esports exhibition area was the most popular at the fair, with local companies like Guangzhou Huali Technology showcasing their products, such as the arcade game "Three Kingdoms Fantasy Battle" [3] - Guangzhou has over 6,000 gaming companies, with notable entries in the "National Cultural Export Key Enterprises" list, including nine companies with overseas revenues exceeding 19 billion yuan [4] Group 3: Technological Innovations in Education - AI technologies are being integrated into educational tools, such as the AI mouse and smart pen developed by YunDie Technology, which enhance learning through real-time data processing and analysis [7][8] - Companies like Vision Source are creating comprehensive educational solutions that combine AI with traditional learning environments, aiming to improve personalized education [8] Group 4: Economic Impact of Cultural Industry - In 2024, Guangzhou's cultural industry is expected to have 3,760 registered entities, achieving revenues of 604.1 billion yuan, with new cultural formats contributing 278.1 billion yuan [9] - The cultural industry's added value is approximately 210 billion yuan, representing over 6.7% of the city's GDP, with three major cultural industry clusters generating over 100 billion yuan each [9]