Core Insights - The Chinese gaming industry is experiencing both structural opportunities and risks from 2024 to 2025, with listed gaming companies in China being undervalued compared to global peers, as evidenced by a significant difference in price-to-earnings ratios [2][3] Performance Disparity - Chinese gaming companies show a distinct performance gap compared to overseas firms, with 70.6% of Chinese companies in the global revenue TOP50 achieving positive revenue growth, outperforming their overseas counterparts by 22.1 percentage points [3] - Profitability remains a challenge, with only 53% of A-share gaming companies being profitable, which is 22 percentage points lower than the overall A-share market [3] - Rising costs, particularly in user acquisition, are pressuring profits, with a 86.6% year-on-year increase in user acquisition spending for the top 100 mobile games [3][4] IP Operations and Competitive Advantage - IP collaboration is becoming crucial for enhancing competitiveness, with a notable increase in IP partnerships, reaching 43 in the first half of 2025, surpassing the total of 39 in 2023 [4] - Listed gaming companies have a competitive edge in revenue return despite high customer acquisition costs, holding 78.2% of revenue in the top 100 mobile games while only accounting for 50% of acquisition spending [4] Structural Opportunities - Non-listed companies are finding success in the lightweight gaming sector, with the market for mini-program games reaching 232.76 billion yuan in the first half of 2025, growing over 40% [5] - Listed companies are leveraging cross-platform strategies, with 76% of the top 100 mobile games being cross-PC platform titles, contributing to revenue growth [5] Technological Advancements - AI technology is evolving from efficiency tools to core gameplay elements, with companies investing heavily in AI-driven games that offer personalized experiences [6] - The integration of AI has shown significant user engagement improvements, as seen with companies like Zulong Entertainment and 37 Interactive Entertainment [6][7] Cost Control Challenges - The commercialization of AI faces significant cost control challenges, with rising operational costs impacting profitability [7] - R&D pressures are increasing, with 14.7% of major listed gaming companies reporting net profit declines due to unmet product expectations [8] Industry Transition - The Chinese gaming industry is in a transformation phase, shifting from revenue competition to a focus on technological reserves, cross-platform integration, and sustainable business models [9]