Investment Rating - The report maintains a "Positive" investment rating for the industry [4]. Core Viewpoints - The report highlights the potential growth of the game "Delta Action" within the FPS market, indicating that it has the potential to carve out a new growth path [4]. - The FPS market remains a significant segment, with a stable monthly market size of approximately 1-1.5 billion in China, driven by a new generation of players [11][14]. - The "Loot Extraction" genre is identified as having greater growth potential compared to other FPS sub-genres, with the report suggesting that it is becoming a key differentiated sub-category within the shooting game ecosystem [22][39]. Summary by Sections Industry Performance - The FPS market is characterized by a stable user base and strong monetization capabilities, with shooting games accounting for 13.89% of revenue among the top 100 mobile games in 2024 despite only representing 5% of the total number of products [11][14]. Game Analysis - "Delta Action" has shown strong performance metrics, ranking first in downloads on iOS in April and May 2025, and achieving a monthly active user (MAU) count of 38.63 million by June 2025 [4][42]. - The game has successfully integrated classic IP value and innovative gameplay, filling a market gap for high-tactical, resource-driven experiences [5][6]. Market Trends - The report notes that the "Loot Extraction" genre is evolving, with significant contributions from major developers like Tencent and NetEase, indicating a trend towards lighter, localized adaptations of this genre [36][39]. - The report emphasizes the importance of continuous updates and operational optimizations, which have helped "Delta Action" maintain a top position in the mobile game sales rankings [52].

Group 1 - The core viewpoint is that AI is transitioning from a supportive tool to a core driving force in the digital sports industry, with a focus on the development of e-sports in the China-ASEAN region [1][3] - The 2025 China-ASEAN E-sports Industry Activity Week has commenced in Nanning, featuring high-profile e-sports competitions with popular games such as "Valorant," "League of Legends," and "Dodgeball," involving professional teams from ASEAN countries [3] - The e-sports sector is recognized as a significant aspect of digital economic development, appealing to the youth globally and becoming a new cultural and social language [3] Group 2 - Nanning, as a provincial capital close to ASEAN, possesses low-latency and high-efficiency data transmission channels, along with robust e-sports infrastructure, which supports the growth of the e-sports industry [3] - The company plans to gather quality resources and actively participate in the construction of the China-ASEAN AI Innovation Cooperation Center, promoting high-quality game development and various e-sports events targeting the ASEAN market [4] - The establishment of the e-sports ecological city operator, Hongli Culture, in Nanning reflects the company's confidence in the region's potential for e-sports and AI industry development [1][4]

Group 1 - The gaming sector continues to experience fluctuations, with the gaming ETF (159869) dropping around 2%, indicating a low-positioning opportunity for investors [1] - Notable performers among holdings include Fuchun Co., Mingchen Health, Huali Technology, and 37 Interactive Entertainment, while companies like Gigabit, Perfect World, Giant Network, and others are seeing significant declines [1] - A boom in domestic shooting games is anticipated from late 2024 to 2025, with Tencent's shooting products showing impressive metrics, such as "Delta Force" achieving 20 million DAU within a year and "Peacekeeper Elite" experiencing over 30% year-on-year growth in average DAU in Q2 2025 [1] Group 2 - The head effect in shooting games is pronounced, with a few products generating substantial revenue, and the "search and destroy" genre gaining popularity due to its immersive experience compared to the "battle royale" format [1] - The gaming sector is undergoing transformations driven by AI, content, and commercialization models, with the gaming ETF (159869) tracking the performance of A-share listed companies in the animation and gaming industry, presenting investment opportunities [2]

Core Viewpoint - Tencent Games has successfully tapped into industry trends, particularly with the upcoming release of "Path of Exile: Ascendancy," which has shown strong performance metrics and community engagement [5][9]. Group 1: Game Performance and Reception - "Path of Exile: Ascendancy" topped the Steam sales chart for eight consecutive weeks, achieving nearly 600,000 concurrent players across all platforms [5]. - The game reached a peak viewership of 1.23 million on Twitch, surpassing previous records for similar products [5]. - The official website for "Path of Exile: Ascendancy" has garnered over 2.25 million pre-registrations [5]. Group 2: Development and Community Engagement - Grinding Gear Games (GGG) has maintained a strong relationship with its community, continuously improving its products based on player feedback [6]. - Tencent's strategy involves providing substantial resources to top developers, ensuring that the best teams can innovate and enhance their IPs [6][9]. Group 3: Game Features and Innovations - "Path of Exile: Ascendancy" emphasizes hardcore gameplay with high freedom in character builds and complex skill interactions, distinguishing it from mainstream ARPGs [12][13]. - The game introduces a random drop mechanism that enhances player experience by breaking the predictability of rewards, similar to the popular "loot and shoot" gameplay [16][18]. - The game has removed the hard mode to cater to local player preferences for faster-paced gameplay, incorporating a sprint system and adjusting skill balances [18]. Group 4: AI Integration and Support - The game features a specialized AI assistant designed to enhance player experience by providing contextual help without restricting player freedom [23][24]. - The AI development will occur in three phases, starting with basic queries and evolving into more personalized assistance based on player behavior [24][26][28]. Group 5: Market Trends and Strategic Positioning - The resurgence of the PC gaming market, driven by successful titles like "Delta Action," has positioned Tencent to regain control over this segment [30][32]. - Tencent's dominance in the gaming industry is reflected in its significant presence in the top ten games on the internet café popularity list, indicating strong market control [33]. - The company is adapting to changing player preferences by diversifying its game offerings across multiple platforms, responding to the growing interest in PC gaming [38].

Core Viewpoint - Tencent Games is poised to capitalize on industry trends with the upcoming release of "Path of Exile: Ascendancy," which has shown significant success overseas and is expected to perform well in the domestic market [1][2][3]. Market Performance - "Path of Exile: Ascendancy" topped the Steam sales chart for eight consecutive weeks, achieving nearly 600,000 concurrent players across all platforms and a peak viewership of 1.23 million on Twitch [4]. - The game has garnered over 2.25 million pre-registrations on its official website [4]. Industry Reputation - The game received multiple accolades in the Steam 2024 awards, including "Platinum Level New Product" and "Most Popular Game" [5]. - Tencent's senior vice president praised the game's development team for their community engagement and continuous improvement [5][6]. Development Strategy - Tencent has acquired a majority stake in Grinding Gear Games (GGG) but allows for independent operation, similar to its management of Riot Games [12]. - GGG's focus on community feedback and innovative gameplay design is expected to enhance the game's appeal [10][15]. Gameplay Features - "Path of Exile: Ascendancy" emphasizes high freedom in character builds and complex skill interactions, distinguishing it from mainstream ARPGs [16][18]. - The game introduces a more dynamic loot system, allowing for random drops from any monster, enhancing player engagement [22][23]. Localization and AI Integration - The game aims for extensive localization, with over one million words of text and 17,000 lines of voice acting in Chinese [31]. - An AI assistant will be integrated to provide guidance without restricting player freedom, enhancing the overall gaming experience [34][35]. Market Trends - The success of "Delta Action" has reignited interest in PC gaming, with a reported daily active user count exceeding 20 million [41]. - Tencent's dominance in the gaming market is reinforced by its strong portfolio, with seven out of the top ten games in the net cafe rankings being Tencent titles [45]. Future Outlook - The gaming industry is witnessing a revival in PC gaming, driven by successful titles like "Black Myth: Wukong," which has increased player interest in the platform [52]. - Despite challenges such as hardware limitations and strict regulatory approvals, the trend towards multi-platform gaming is expected to continue [54].

Core Viewpoint - Tencent is shifting its focus towards "evergreen games" as a strategic response to the changing dynamics in the gaming industry, particularly in light of recent legal challenges and market conditions [4][6][21]. Group 1: Evergreen Games Strategy - The term "evergreen games" refers to projects that have sustained popularity and revenue over time, with Tencent defining them as games generating annual revenue of at least 4 billion RMB and maintaining a daily active user (DAU) count of over 5 million for mobile games [6][7]. - Tencent currently has 14 games that meet the evergreen standard, including flagship titles like "Honor of Kings" and "Peacekeeper Elite" [7][11]. - The gaming industry has experienced a significant downturn since 2020, leading to a reduction in new project launches and a scarcity of blockbuster games, which has prompted Tencent to focus on maximizing the potential of its existing evergreen titles [7][12]. Group 2: Market Dynamics and Challenges - The gaming industry is facing a cyclical downturn, with a shift in player preferences towards diverse entertainment options such as live streaming and short videos, making the development of evergreen games a necessity for survival [43][44]. - Tencent's investments in content-heavy games and large-scale projects have not yielded the expected returns, leading to a strategic pivot back to platform games that leverage its established social networks and user bases [21][25][44]. - The company has faced significant challenges in developing new content-driven games, as evidenced by the high costs and risks associated with such projects, which have led to a preference for investing in existing successful titles [27][31]. Group 3: Development and Innovation - Tencent's approach to game development emphasizes the importance of industrialized processes and the ability to produce engaging content consistently, which is crucial for maintaining player interest in evergreen games [40][41]. - The company has recognized that the success of its evergreen games relies not only on strong operational strategies but also on the capability of development teams to deliver interesting content regularly [10][12]. - Tencent's historical investments in various game genres, including first-person shooters and MOBA games, have positioned it well to capitalize on the evergreen game strategy, as these genres typically have higher player retention rates [34][40].

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Insights - The report emphasizes the recovery trend in the gaming sector, with a focus on game, music, trendy toys, and AI applications. It suggests continued investment in AI applications and high-demand gaming products [3][4] - The report highlights the strong performance of companies like Kuaishou and Tencent, driven by AI optimization in marketing and content production, leading to significant revenue growth [3][4] - The gaming market shows high activity with new game releases and a positive outlook for domestic animated films, indicating a robust pipeline for IP products [3][4] Summary by Sections Industry Data Overview - "Valorant" ranks first in the iOS free game chart, while "Honor of Kings" maintains its position at the top of the iOS revenue chart as of August 23, 2025 [10][15] - The film "Capturing the Wind" achieved the highest box office revenue of 3.38 billion CNY for the week [27] Industry News Overview - The release of DeepSeek-V3.1 marks a significant advancement in AI capabilities, enhancing various applications including gaming and image editing [33] - The gaming sector continues to show growth, with a reported 8% increase in the market in July [33] - The report notes favorable policies from the broadcasting authority that may boost content supply [33] Company Performance - Kuaishou reported a 12.8% year-on-year increase in online marketing service revenue, reaching 19.8 billion CNY in Q2 2025 [3] - Tencent's Q2 2025 report indicates increased usage of AI-native applications, enhancing advertising effectiveness and user engagement [3] - The gaming company Shunwang Technology reported a 93.2% year-on-year increase in net profit for Q2 2025, attributed to the recovery in the gaming sector [3] Upcoming Releases - The new game "Etheria" by Xindong Company is set for a closed beta test on August 28, 2025, with high anticipation reflected in its ranking on pre-registration charts [22][26] - The animated film "Three Kingdoms in the Starry Sky" is scheduled for release on October 1, 2025, indicating a strong pipeline for domestic animated content [3]

Investment Rating - The investment rating for the media and internet industry is "Positive" (maintained) [4] Core Insights - The report emphasizes the importance of focusing on companies with better-than-expected mid-year performance, which can indicate industry development directions and short-term trading flexibility. High-growth sectors include gaming, trendy toys, and AI applications [4][5][6][10]. Summary by Sections Gaming Sector - The gaming sector is experiencing a peak with new game releases and significant updates to existing titles. Companies like Tencent and Gigabit are showing resilience and growth driven by new games. The report suggests focusing on major gaming companies exploring AI integration in gaming [5][6][10]. Trendy Toys Sector - Pop Mart achieved a revenue of 138.8 billion yuan in the first half of 2025, a year-on-year increase of 204.4%. The sector remains highly prosperous, with more companies entering the trendy toy market. The report recommends monitoring companies involved in card games and trendy toys for their growth potential [6][25]. Film and Television Sector - The report notes that quality films are being released during the summer season, which is expected to drive steady growth in box office revenues. It suggests paying attention to key film producers and cinema companies. The television sector is also set to benefit from new policies aimed at enhancing content supply [7][8][44]. Internet Sector - The report advises a rational assessment of platform strategies in the context of reducing competition. It highlights the importance of major companies like Tencent and Alibaba, which are expected to maintain their performance resilience. The focus is on AI technology and applications as core to industry development [9][10]. AI Applications - The report highlights the release of GPT-5 and the ongoing advancements in AI models. It suggests monitoring domestic AI companies for their model updates and the impact on various application sectors, including education and e-commerce. Companies involved in AI-driven live streaming and digital content creation are also recommended for attention [10][11][12]. Market Performance - The media sector saw a 5.17% increase in the A-share market from August 18 to August 22, 2025, ranking sixth among all industries. The gaming, digital media, and television broadcasting sub-sectors performed well, while film and advertising sub-sectors lagged [15][17][18]. Company Announcements - Gigabit reported a revenue of 2.518 billion yuan for the first half of 2025, a year-on-year increase of 28.49%. Pop Mart's revenue for the same period was 138.76 billion yuan, reflecting a significant growth trajectory. Other companies like Kuaishou and Bilibili also reported strong earnings growth [26][27][29][30].

Core Points - The new installment of the "Gu Jian Qi Tan" series, titled "Gu Jian," has been announced by Shanghai Zhulong, marking the first new single-player game in the series since "Gu Jian Qi Tan 3" was released in November 2018 [2][3] - The teaser for "Gu Jian" has garnered over 10 million views on Bilibili as of August 21 [2] - The game is set to feature a new protagonist, a "Yin Yang Judge," who uses a "Book of Life and Death" to interact with souls, emphasizing a unique narrative that does not require players to have played previous installments [4][5] Company Overview - Shanghai Zhulong was established in 2007 and is known for its narrative-driven games that draw heavily from Chinese folklore and mythology [2][6] - The company has diversified its portfolio with various game types, including an MMO and a long-term service model game, while maintaining a focus on single-player RPGs [3][6] Investment and Development - "Gu Jian" was initiated in 2021, with Tencent's investment in early 2024 allowing for team expansion and development acceleration, leading to a production phase of approximately two years [6] - Tencent increased its stake in Shanghai Zhulong's parent company, Beijing Wangyuan Shengtang Entertainment Technology Co., from 44.27% to 87.36%, becoming the largest shareholder [6] Market Trends - The announcement of "Gu Jian" coincides with a surge of large single-player games being revealed, indicating a growing interest in this genre within the domestic market [9][10] - The success of "Black Myth: Wukong" has positively influenced consumer spending on other console games, with 66.7% of surveyed users purchasing additional titles alongside it [10]

Summary of Key Points Core Viewpoint - The Hong Kong stock market experienced significant net inflows from Northbound trading, with a total net buy of HKD 51.66 billion on August 22, 2023, indicating strong investor interest in certain stocks while others faced net sell-offs [1]. Group 1: Stock Performance - Kuaishou-W (01024) received the highest net buy of HKD 11.72 billion, supported by its strong Q2 earnings report showing a revenue of HKD 350.5 billion, a year-on-year increase of 13.1%, and an adjusted net profit of HKD 56.2 billion, up 20.1% [4]. - Semiconductor stocks showed mixed results, with SMIC (00981) and ZTE Corporation (00763) gaining net buys of HKD 10.92 billion and HKD 3.16 billion respectively, while Hua Hong Semiconductor (01347) faced a net sell of HKD 7.5 billion [5]. - Meituan-W (03690) attracted a net buy of HKD 10.08 billion, bolstered by its international expansion efforts, including the launch of its food delivery brand Keeta in Qatar [5]. Group 2: Notable Transactions - Tencent (00700) saw a net buy of HKD 4.61 billion, driven by a 17% year-on-year increase in domestic game revenue to HKD 404 billion in Q2 [6]. - Xiaopeng Motors-W (09868) experienced a significant net sell of HKD 13.08 billion, following a 13% surge in its stock price, as investors took profits [7]. - Alibaba-W (09988) recorded a net buy of HKD 3.85 billion, while Xiaomi Group-W (01810) faced a net sell of HKD 9.02 billion [7].