Company Overview - The company, Chuangmeng Tiandi, faced significant challenges this year, with its stock price dropping to a historical low of 0.68 HKD from an average of 2-3 HKD [1] - The flagship self-developed product, "Kara Bichu," has been in development for six years, with four years of research and two years of public testing, and has established a stable user base despite not being a blockbuster [1][3] - The company reported a turnaround in its financial performance, achieving profitability, with notable growth in long-term products and new releases [1][57] Product Development - "Kara Bichu" saw a 10% increase in monthly active users and a 75% increase in revenue in the first half of the year, finally achieving profitability in May [3] - The game features a unique "string transformation" gameplay mechanic, allowing characters to transform into 2D paper figures during combat, which has garnered positive player feedback [7][10] - The development team shifted focus from competitive gameplay to enhancing character value and social interaction, leading to a more casual gaming experience [19][24][36] Strategic Adjustments - The CEO, Chen Xiangyu, emphasized the importance of understanding player needs and fostering a collaborative environment, which has led to a more player-centric approach in game development [41][50] - The company has streamlined its operations by focusing on its core business and gradually divesting from non-gaming ventures, allowing for sustained investment in "Kara Bichu" [50][59] - The company aims to leverage its IP for long-term growth, with plans for merchandise and community engagement, as evidenced by the successful pre-sale of 5,000 figurines [55][68] Industry Insights - The competitive landscape for shooting games is intense, and the company recognizes the need for differentiation rather than direct competition with larger firms [60][63] - Innovations in gameplay mechanics, such as the "string transformation," are seen as critical for attracting players and retaining talent within the industry [63][64] - The company believes that the gaming industry offers unique opportunities for creativity and player engagement, contrasting with the complexities of offline business models [66][68]

Core Insights - The company, Chuangmeng Tiandi (01119), reported a mid-term performance for the six months ending June 30, 2025, with revenue of 686 million RMB, a gross profit of 289 million RMB, and a net profit attributable to shareholders of 28.514 million RMB, marking a turnaround from a loss of 110 million RMB in the same period last year [1][1][1] - The gaming segment remains the primary revenue driver, contributing 97.5% and 97.3% of total revenue for the periods ending June 30, 2025, and 2024, respectively [1][1][1] - The company’s core games, including "Subway Surfers," "Dream Garden," "Dream Home," and "Mecha Squad," continue to generate significant revenue, while new releases like "Legendary Store: Management and Crafting" and the jointly developed "Delta Action" with Tencent have also performed well [1][1][1]

Summary of Conference Call Company Overview - The company, referred to as "创梦" (Chuangmeng), is a global gaming company with integrated capabilities in game publishing and development, focusing on high-quality business growth and stability in operations [1][2]. Key Business Segments Game Publishing - The company has a mature game publishing business, with long-lifecycle products such as "Subway Surfers" and "Dream Garden" contributing to revenue [2]. - New releases like "Mecha Squad" and "Legendary Store" have also performed well, indicating a focus on unique and niche products [2][3]. - The company emphasizes user engagement through content iteration and optimizing user lifetime value (LTV), achieving a 40% increase in payment rates through enhanced content and competitive gaming features [2]. Self-Developed Games - "卡拉比丘" (Karabichu) is highlighted as a key self-developed product, launched globally with significant user engagement and positive feedback [5][6]. - The game has achieved top rankings on platforms like Steam and is expected to contribute positively to the company's revenue in 2025 [5][6][11]. - The company plans to expand the game to mobile and console platforms, enhancing its global operational capabilities [6]. AI Technology Integration - The company is actively integrating AI into its operations, including community management and game development processes [7][8]. - AI tools have improved operational efficiency by over 30%, enhancing game development and user engagement [8][41]. - The establishment of a joint innovation lab with Tencent Cloud focuses on leveraging AI to enhance game development processes [40][41]. Financial Performance - Total revenue for 2024 is reported at 1.51 billion RMB, showing a decline due to the cessation of non-core game operations and the transition of self-developed games to a net revenue recognition model [10][11]. - Despite the overall revenue decline, core games continue to perform well, with a 10% increase in publishing revenue [11]. - The adjusted loss for 2024 is 30 million RMB, primarily due to ongoing R&D investments in "卡拉比丘" [12]. Marketing and Cost Management - Marketing expenses decreased by 15% to 196 million RMB, attributed to improved customer acquisition efficiency and community engagement [13]. - R&D expenses also saw a reduction, with a focus on capitalizing certain development costs [13][14]. Future Outlook - The company aims to enhance its game portfolio with a focus on long-term operational stability and profitability [17]. - Plans to optimize the game publishing model to improve cash flow and reduce risks associated with upfront payments [18]. - The company is committed to improving stock liquidity and investor structure following its exit from the Hong Kong Stock Connect [31]. Strategic Focus - The company aims to solidify its position as an IP-driven entity, focusing on high-quality game content and sustainable profitability [44][46]. - Future game development will prioritize high-barrier genres, leveraging AI technology to enhance gameplay and user experience [46][47]. Additional Insights - The company is adapting its game design based on user feedback, particularly for "卡拉比丘," to include more casual gameplay options and improve user experience [24][25][26]. - The integration of AI in gameplay is expected to enhance player engagement and retention, with plans for more intelligent NPC interactions [42][43]. This summary encapsulates the key points discussed during the conference call, highlighting the company's strategic direction, financial performance, and future initiatives.