Summary of Conference Call Records Industry Overview: Gaming Industry Key Companies and Highlights - **Century Huatong**: Achieved notable rankings in the global mobile game export list for January, with "Whiteout Survival" at second, "Kingshot" at third, "TTM" at tenth, and "Truck Star" at twenty-ninth. The company has a high overseas game revenue share, with new games "TTM" and "Truck Star" showing significant growth in December and January [1][2] - **Giant Network**: The game "Supernatural Action Group" is expected to innovate during the Spring Festival, with a daily active user (DAU) surpassing 100 million by January 31. The new game "Famous Generals Kill" was launched on December 19 [2] - **37 Interactive Entertainment**: The mini-program game "Survival for 33 Days" has consistently ranked in the top five, with the RO in Hong Kong and Macau launched on January 15. The company has a rich pipeline of new products [2] - **Kongzhong Network**: The "Legend Box" is expected to create platform growth, and the AI companion application "EVE" is scheduled for launch on March 14 [2] - **G-bits**: Launched a new Three Kingdoms-themed SLG game "Nine Muwu" on December 18 [2] - **Perfect World**: The key game "Yihuan" has completed its third test with high ratings on Bilibili and Taptap [2] - **Xindong Company**: Launched "Xindong Town" overseas on January 8 and "Diver Dave" on February 6 [2] Market Opportunities - **Overseas Expansion and Female Market Growth**: The Chinese market is projected to generate sales revenue of 168 billion yuan in the first half of 2025, a year-on-year increase of 14.08%, with a user base of 679 million, up 0.72% year-on-year [2] - **Global Market Trends**: The mobile gaming market is shifting from user growth to consumption power enhancement, with projected revenues of $81.7 billion in 2024, reaching a three-year high. Chinese self-developed games are expected to generate $9.5 billion in overseas revenue in the first half of 2025, an 11% year-on-year increase [3] - **Female-oriented Games**: The market size for female-oriented games is expected to reach 8 billion yuan in 2024, with a growth rate of 124.1%, significantly outpacing the overall market [3] Policy and Technological Impact - **Regulatory Environment**: By 2025, the issuance of domestic game licenses is expected to exceed 140 per month, with a shift towards industry support and encouragement for game exports and gaming as a new consumption driver [3] - **AI and Technology Integration**: The application of AI in gaming has progressed significantly since 2023, enhancing product development and advertising efficiency. Emotional companion games are highlighted as a promising direction for AI gaming, with a focus on "EVE" from Kongzhong Network [3][4] - **Investment in Emerging Technologies**: Companies like 37 Interactive Entertainment and Century Huatong are investing in brain-machine interface technologies, while Giant Network collaborates with Volcano Engine on AI NPCs [4]

Summary of Conference Call Records Industry Overview - The conference call focuses on the gaming industry, highlighting the impact of AI and new technologies on industry development and the anticipation of upcoming annual and quarterly reports [1][2]. Key Companies and Highlights - **Century Huatong**: Achieved notable rankings in the global mobile game export list for January, with "Whiteout Survival" at second, "Kingshot" at third, "TTM" at tenth, and "Truck Star" at twenty-ninth. The company has a high overseas game revenue share, with new games "TTM" and "Truck Star" showing significant growth in December and January [1]. - **Giant Network**: The game "Evergreen" is expected to innovate during the Spring Festival, having launched in Hong Kong and Macau on November 27. As of January 31, the daily active users (DAU) surpassed 100 million, with upcoming Valentine's Day and Spring Festival events anticipated [1]. - **37 Interactive Entertainment**: The mini-program game "Find the Book" has consistently ranked in the top five, with a launch in Hong Kong and Macau on January 15. The company has a rich pipeline of new products [1]. - **Kying Network**: The "Legend Box" is expected to create platform growth, with the AI companion application "Find the Book" scheduled for release on March 14 [1]. - **G-bits**: Launched a new Three Kingdoms-themed SLG game "Find the Book" on December 18 [1]. - **Perfect World**: The key game "Find the Book" has completed its third testing phase, receiving high ratings on Bilibili and Taptap [1]. - **Xindong Company**: Launched "Find the Book" overseas on January 8, with another release planned for February 6 [1]. Market Opportunities - The overseas market and the female gaming segment present significant opportunities for the industry. In the Chinese market, sales revenue is projected to reach 168 billion yuan in the first half of 2025, a year-on-year increase of 14.08%, with a user base of 679 million, up 0.72% year-on-year [2]. - The global mobile gaming market is shifting from user growth to consumption power enhancement, with expected revenue of $81.7 billion in 2024, reaching a three-year high. Chinese self-developed games are projected to generate $9.5 billion in overseas revenue in the first half of 2025, a year-on-year increase of 11% [2]. - The market for female-oriented games is expected to reach 8 billion yuan in 2024, with a growth rate of 124.1%, significantly outpacing the overall market [2]. - Policy changes are supporting the industry, with over 140 domestic game licenses expected to be issued monthly by 2025, promoting game exports and positioning gaming as a new consumer driver [2]. Technological Impact - The application of AI and other technologies in the gaming industry is showing promising results. Since 2023, AI has been integrated into game production and advertising, leading to significant cost reductions and efficiency improvements, particularly in art production [3]. - Emotional companion games are identified as a key area for AI application in the short term, with Kying Network's product "Find the Book" set for public testing on March 14 [3]. - Other technological advancements, such as brain-machine interface technology, are seen as potential commercial applications for the gaming sector, with companies like 37 Interactive Entertainment investing $20 million in related technologies [3]. - Marketing strategies like GEO marketing are expected to influence game distribution, with 37 Interactive Entertainment investing in leading domestic tech companies [3]. - Giant Network is collaborating with Volcano Engine on AI NPCs [3].

Core Viewpoint - The company emphasizes a strategy focused on continuous product improvement rather than launching new games at any cost, even if it leads to long-term losses [1] Group 1: Product Strategy - The company will not make excessive subjective judgments or selections regarding new product investments [1] - The success of TTM and TruckStar reflects the concentrated embodiment of the game development methodology of the company [1] - The company has a sufficient reserve of games currently available [1]

Group 1: Product Strategy - The new SLG products will focus on the casual gaming segment, which is expected to be a core growth area for the company due to its long lifecycle and stable revenue generation [1] - The company aims to leverage data-driven strategies to navigate the increasingly competitive casual gaming market, with overseas expansion identified as a key battleground [1] Group 2: Financial Performance - Profit margins for major games in 2026 are dynamic and influenced by product lifecycle and investment ratios, making it difficult to provide specific figures [2] - The investment recovery period for casual games is relatively stable and can be extended due to their longer lifecycle compared to SLG games [2] Group 3: Business Growth and Strategy - The company anticipates a noticeable increase in revenue from IP licensing in 2026, following a partial recognition of profits in 2025 [2] - The gradual shift in revenue sharing towards upstream channels in overseas markets is expected to impact profit margins slowly over time [2] Group 4: Resource Allocation and Team Expansion - The company does not plan to significantly expand its team in 2026, opting for selective hiring based on business needs and potential new product categories [2] - Resource allocation for new products will be based on performance data rather than subjective judgments, emphasizing continuous updates and improvements [2] Group 5: Investor Relations - The company is committed to considering its development stage and specific circumstances when planning future dividend distributions to investors [2]