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].

Group 1 - Kuro Games' first carnival attracted over 10,000 players, showcasing its IP appeal and user engagement [1] - The event's tickets sold out within minutes, indicating strong demand and brand connection [1] - The rise of offline experience economy in the gaming industry may lead to a revaluation of the sector [1] Group 2 - Zero Creation Games announced a new text adventure game based on the "Dragon Tribe" IP, in collaboration with Tencent Video [2] - The game is set to be released at the end of 2026, aiming to leverage the top-tier IP to expand its user base [2] - The trend of IP collaboration in the gaming industry is deepening, potentially accelerating resource integration and market differentiation [2] Group 3 - Tencent updated the main visual and game description for "Wilderness Origin" in response to a copyright lawsuit from Sony [3] - This adjustment reflects the increasing awareness of copyright protection within the gaming industry [3] - There is a growing market focus on compliance and risk management capabilities of leading companies [3]

Group 1 - Tencent is facing simultaneous lawsuits both domestically and internationally, with Sony accusing Tencent of copying its game "Horizon" in the game "Wild Origin" and filing a lawsuit in California federal court [2] - A player of "Honor of Kings" has sued Tencent over the game's matchmaking system, claiming it lacks transparency and demanding the disclosure of algorithm weight parameters, with the case set to be heard on August 12 in Shenzhen [2] - The player alleges that after winning streaks, the system intentionally matches them with "actor teammates" or higher-ranked opponents, resulting in a win rate that hovers around 50% [2] Group 2 - Tencent's official response denies manipulating win rates, stating that the goal is to achieve "evenly matched games," attributing winning and losing streaks to player skill fluctuations or opponent strategy adjustments, unrelated to the algorithm [2] - The lawsuit has garnered significant public attention due to the popularity of "Honor of Kings," with related topics on Douyin exceeding 1 billion views, sparking debates about whether game algorithms are "black boxes" and if core algorithms are considered trade secrets [2] - According to the Consumer Rights Protection Law, consumers have the right to know the true conditions of the products or services they purchase, which may impact the outcome of the lawsuits regarding algorithm transparency [3]

Industry Overview - The Chinese gaming industry achieved record highs in revenue and user scale in the first half of 2025, with actual sales revenue reaching 168 billion yuan, a year-on-year increase of 14.08%, and user scale nearing 679 million, up 0.72% [4][3] - The growth is attributed to the successful launch of several new games, the steady performance of evergreen titles, and the strong momentum in esports and mini-program games [4] Event Highlights - The 2025 ChinaJoy opened in Shanghai, featuring 743 companies and showcasing cutting-edge technologies such as 3D printing, AI gaming applications, and brain-computer interfaces [5] - The event emphasized the integration of gaming with technology and culture, with significant participation from both major and independent game developers [6][7] Company Developments - Chuangmeng Tiandi received a strategic investment of 39 million HKD from Playrix, marking a shift from a "distribution agency" model to a "equity binding" partnership, which is expected to enhance long-term cooperation [8][9] - Giant Network's new mobile game "Supernatural Action Team" surpassed 1 million concurrent users shortly after launch, indicating strong market performance and contributing to a significant increase in the company's stock price [10] - The new simulation game "Talking Tom Cat 2" achieved over 11 million downloads within two weeks of its overseas launch, ranking highly in multiple countries' app stores [11] Regulatory and Legal Issues - Tencent's "Honor of Kings" faced a lawsuit regarding its matchmaking algorithm, marking a significant legal challenge in the gaming industry [12] - Sony filed a lawsuit against Tencent, alleging that Tencent's new game "Wild Origin" plagiarized its title "Horizon Zero Dawn" [13] International Developments - EA announced a transformation of the "Battlefield" series into a "platform" model, indicating a shift towards long-term operation and continuous updates for the franchise [14][15] - The esports events for the 2026 Asian Games were confirmed, including popular titles such as "League of Legends" and "Honor of Kings" [16] Esports Events - The Delta DDC Diamond Championship concluded with Team TB winning the title, showcasing the competitive landscape of esports in China [17]

Group 1 - The 22nd China International Digital Interactive Entertainment Expo (ChinaJoy) officially opened on August 1 in Shanghai, with Tencent Games showcasing 17 products, occupying nearly half of the N4 hall [1] - Tencent Games' theme for this year's event is "COOL Goose Summer Camp," which aims to enhance product experience and booth services, featuring over ten gameplay categories and popular new releases such as "Runeterra: League of Legends Card Battle" and "Dance Dance Revolution: Party" [1] - The event includes immersive trial experiences and interactive activities like esports competitions and challenge games, providing a comprehensive exhibition service for attendees [1] Group 2 - The "COOL Goose Summer Camp" consists of a central square, a comprehensive exhibition area, and three independent exhibition zones, highlighted by a 40-meter "Goose MAX" screen that connects various experiences [2] - Attendees can engage in "cyber interaction" by projecting hand-drawn images and real-time comments onto the "Goose MAX" screen, with live leaderboards for competitive events displayed [2] - The central square features a green camp design with multiple interactive areas, allowing players to participate in fun activities and earn rewards, such as reciting a poem to use a loudspeaker or generating AI-customized memorabilia [2] Group 3 - The central square is flanked by a comprehensive exhibition area and three independent booths, showcasing 17 game products with diverse interactive experiences [3] - The comprehensive exhibition area features 11 products, including popular titles like "Honor of Kings" and games from Supercell, covering various genres such as strategy and simulation [3] - Independent booths include major titles from the Dungeon Fighter IP and new releases like "Valorant" and "Runeterra," offering extensive trial activities and a unique exhibition experience for players [3]

Core Viewpoint - The legal battle between Sony and Tencent has escalated from initial collaboration to a lawsuit, with Sony accusing Tencent of copyright and trademark infringement regarding the game "Wild Origin" allegedly copying elements from "Horizon Zero Dawn" [1][2]. Group 1: Legal Actions and Allegations - Sony filed a lawsuit in a California federal court, claiming that "Wild Origin" shares significant similarities with the "Horizon" series in visual style, core settings, and character designs [1][2]. - The lawsuit includes requests for an injunction to prevent Tencent from continuing the development and distribution of "Wild Origin," as well as damages of up to $150,000 for each infringement [6]. Group 2: Game Development and Market Impact - "Horizon Zero Dawn," developed by Sony, has sold over 38 million copies globally and is considered one of the most successful IPs on the PlayStation platform [2]. - "Wild Origin," developed by Tencent's Aurora Studio, is an open-world survival game that has drawn comparisons to "Horizon" due to its thematic elements and gameplay mechanics [2][3]. Group 3: Industry Perspectives - Industry analysts suggest that the lawsuit may be a reflection of deeper competitive tensions between Tencent and Sony, especially given Tencent's role as the exclusive agent for Nintendo Switch in China, creating direct competition with Sony's PlayStation [5]. - The gaming industry often sees a fine line between inspiration and plagiarism, with many games borrowing elements from each other, complicating the legal landscape surrounding such disputes [4][5][8].

Core Insights - The gaming industry in China has experienced its steepest growth in nearly four years, with actual sales revenue reaching 168 billion yuan in the first half of 2025, marking a year-on-year increase of over 14% [2][4] - The number of gaming users has also hit a historical high of approximately 679 million, reflecting a year-on-year growth of 0.72% [2] Market Performance - The domestic market for self-developed games generated actual sales revenue of 140.45 billion yuan in the first half of 2025, showing a year-on-year increase of nearly 19.3% [5] - The overseas market for self-developed games achieved actual sales revenue of 9.5 billion USD, with a year-on-year growth of over 11%, primarily driven by long-term product revenues and new releases [5] Segment Highlights - The mini-program gaming sector saw significant growth, with actual sales revenue of 23.276 billion yuan in the first half of 2025, reflecting a year-on-year increase of over 40% [7] - The console gaming market in China generated actual sales revenue of 1.03 billion yuan, with a year-on-year growth of nearly 30% [7] - The esports gaming market also performed well, with actual sales revenue of 80.65 billion yuan, marking a year-on-year increase of 16.6% [7] Company Performance - Century Huatong is projected to achieve a net profit of 2.4 billion to 3 billion yuan in the first half of 2025, representing a year-on-year increase of 107% to 159% [7] - Youzu Interactive is expected to report a net profit of approximately 40 million to 60 million yuan, with a year-on-year growth rate of 768.7% to 1203% [7] - Tencent's gaming business reached a record single-quarter revenue of 59.5 billion yuan, with growth exceeding 20% in both domestic and international markets [8] Industry Trends - The gaming industry is witnessing a boost from the introduction of new game titles and the sustained performance of evergreen games, alongside strong growth in esports and mini-program games [5][7] - The Chinese government is supporting talent development in the gaming sector, with the inclusion of game art design in higher education, marking a new phase of systematic and professional training [8]

Core Viewpoint - Sony has filed a lawsuit against Tencent, claiming that Tencent's upcoming game "Light of Motiram" infringes on the copyright and trademark rights of Sony's "Horizon" series, seeking to halt its development and seek damages [1][39]. Group 1: Tencent's Contact with Sony - In March 2024, Tencent executives approached Sony Interactive Entertainment (SIE) at the Game Developers Conference, proposing to obtain IP licensing for a mobile game set in the "Horizon" universe [3]. - Tencent expressed its interest in the "Horizon" series due to its high-value IP and international reputation, as highlighted in their presentation titled "Expanding the Horizon" [5]. - Tencent's proposal included retaining the original open-world setting of "Horizon" while introducing Eastern aesthetics and gameplay elements [9]. Group 2: Rejection of Tencent's Proposal - SIE officially rejected Tencent's proposal for IP licensing in April 2024, citing the current development stage of the "Horizon" series as a reason [13]. - Despite the rejection, Tencent announced the launch of "Light of Motiram" later in 2024, which closely resembles the "Horizon" series in style and content [14]. Group 3: Similarities Between the Games - The lawsuit details that "Light of Motiram" has appropriated many recognizable elements from the "Horizon" series, including world setting, narrative framework, character design, and visual expression, leading to public confusion regarding the game's origin [14][15]. - The narrative of "Light of Motiram" mirrors that of "Horizon," depicting a post-apocalyptic world dominated by giant machines, with players uncovering the secrets of a lost civilization [15][16]. - The promotional materials for "Light of Motiram" show significant visual similarities to "Horizon," including the use of similar character designs and environmental elements [18][21]. Group 4: Legal Demands from Sony - Sony's lawsuit requests the court to rule that Tencent has willfully infringed on the copyright of the "Horizon" series and violated SIE's trademark rights related to the character Aloy [37]. - The lawsuit seeks both temporary and permanent injunctions against Tencent, prohibiting them from continuing to develop or market "Light of Motiram" [37]. - Sony is also seeking statutory damages of up to $150,000 for each infringement, along with the destruction of infringing materials and recovery of profits gained from the alleged infringement [38].

Group 1 - In July, over 900 billion units of funds were issued, indicating a recovery trend in the market, with 115 new funds established [1] - More than 90% of actively managed equity funds achieved positive returns this year, with an average return of 13.74% as of July 28 [1] - 126 public fund companies have conducted over 5,400 self-purchases this year, signaling a positive investment outlook based on favorable policies and economic fundamentals [1] Group 2 - The scale of QDII funds reached a record high of 683.77 billion yuan by the end of June, with significant growth in funds investing in Hong Kong stocks [2] - Overseas funds showed strong interest in Chinese stocks, with five major Chinese stock ETFs attracting over $2.7 billion in July [2] - Fund companies are responding to the bond market's volatility by implementing strategies to manage liquidity and retain institutional clients [2] Group 3 - The low-altitude economy in China is experiencing rapid growth, with projections suggesting it could exceed 850 billion yuan by 2025 and reach one trillion yuan by 2026 [4] - The development of low-altitude tourism is expanding beyond sightseeing to include a full range of services, enhancing consumption in related sectors [4] Group 4 - Tencent is facing a lawsuit from Sony for alleged copyright infringement regarding its new game "Wild Origin," which is claimed to have similarities to "Horizon Zero Dawn" [5] - Ping An Fund announced the discontinuation of its APP, migrating services to its official website and WeChat service account [6] - Douyin is merging its supermarket business into its instant retail service to enhance operational efficiency [6]

Market Overview - The Hang Seng Index is expected to rise towards 26,000 points due to a stable economic outlook in mainland China and a postponement of tariffs by the US [2] - Active trading in the Hong Kong market indicates a positive risk appetite, with capital rotating among different sectors [2] Short-term Sector Outlook - Focus on upcoming economic indicators including the US Federal Reserve's interest rate decision, Q2 GDP, and earnings reports from major companies such as HSBC and Budweiser [3] Macro Focus - The IMF has slightly raised its global growth forecast for 2025 and 2026, predicting a 4.8% growth for China this year [4][9] - The US and China are expected to hold another round of trade talks within approximately 90 days, pending approval from President Trump [4][9] Corporate News - Baoshan International has issued a profit warning, expecting a 44% drop in interim profits [5][11] - Huaneng Power International reported a 23% increase in net profit for the first half of the year, exceeding expectations [5][11] - Ideal Automotive launched its second pure electric vehicle, priced starting at 320,000 RMB [5][11] International Market Outlook - The US Federal Reserve maintained interest rates, indicating a cautious approach towards future inflation uncertainties [6] - The ongoing trade negotiations are affecting oil demand growth, with OPEC+ increasing supply to limit international oil price increases [6] Index Performance - The Hang Seng Index closed at 25,524 points, with a year-to-date increase of 27.24% [6] - The Shanghai Composite Index rose by 0.33% to close at 3,610 points, reflecting a year-to-date increase of 7.70% [6] Commodity and Currency Market - The CRB Commodity Index increased by 0.81% year-to-date, while gold prices rose by 0.36% [6] - The US Dollar Index showed a slight increase of 0.26% year-to-date [6] Company Earnings Forecasts - China Ruyi Holdings expects to turn a profit for the first half of the year, projecting a net profit of approximately 1 to 1.2 billion RMB [11] - Huaneng Power International's revenue for the first half of the year was reported at 112.03 billion RMB, a decrease of 5.7% year-on-year [11]