Zhitong Financial APP learned that China Galaxy Securities released a research report saying that the enabling effect of AI on the media sector will continue, and the current performance momentum of the industry has not been fully released, and is firmly optimistic about the long-term growth potential of high-quality companies under the trend of large industries.The game, marketing, film and television industries will take the lead in verifying the logic of AI reducing costs and increasing efficiency and raising the upper limit of willingness to pay.It is recommended to pay attention to the following directions: games: it is recommended to pay attention to Perfect World (002624.SZ), which has excellent R & D capabilities, and sufficient reserves for new trips; advertising and marketing: it is recommended to pay attention to the marketing companies with operational improvement and layout in AI: Zhejiang Culture Internet (600986.SH), etc.; cinema lines: it is recommended to pay attention to film cinema companies with sufficient film reserves: light Media (300251.SZ) and so on.

The main points of ▍ China Galaxy Securities are as follows:

1) Film and television: the film market is hot, and the series and variety index are up and down.

In September, the national box office totaled 2.823 billion yuan (including service charges), up 120.89 percent from a year earlier and down 63.65 percent from a month earlier. "eighth suspect", "Oppenheimer" and "put all your eggs in one basket" contributed 36.67% of the total box office.

On the demand side, the number of movies was 10.811 million, the attendance rate was 5.2%, and the number of moviegoers was 68 million, up 23.68%, 67.74% and 112.5%, respectively, compared with the same period last year. On the supply side, 59 films were released in September, an increase of 103.45% over the same period last year and 18.00% from the previous month. The top 10 films all scored more than 9 points, with both quality and quantity rising. As of October 1, 19 new films were to be released in October, and the supply remained adequate. At the screening end, Wanda, China Film Digital and Shanghai United ranked in the top three, contributing 35.85% of the box office, while Wanda, Hengdian and CGV ranked in the top three, contributing 21.45%. The variety index of the series also rose and fell.

2) Games: the scale of the game market is growing continuously, and the game version numbers continue to be issued.

In July 2023, the actual sales revenue of China's game market was 28.61 billion yuan, up 3.34% from the previous month and 37.49% from the same period last year. The year-on-year growth rate was positive for three consecutive months. The actual sales revenue of mobile games was 22.11 billion yuan, an increase of 3.40% over the same period last year and 51.09% month-on-month.

From the version number, at the end of September, the State Press and publication Administration announced the approval information of domestic games in September. In terms of quantity, a total of 89 models have been approved in this batch, and the number issued so far in 2023 has reached 699, nearly 50% more than that issued in the whole of last year, and the policy on approval of version numbers has been gradually relaxed. "China Game Industry AIGC Development Prospect report" shows that more than 60% of domestic game enterprises have a clear AIGC layout.

With the continuous iterative progress of technology, multimodal AIGC applications that can realize intelligent recognition and processing of voice, image, text and other information in the game have matured, and the freedom and diversity of the game play and plot are also expected to be significantly improved, so as to provide players with a better game experience and further improve the payment frequency and depth of payment for users. The new product cycle of the company in the superposition industry has opened steadily, and the actual sales revenue of the domestic game market increased by 22.2% in the first half of the year, and the game industry is expected to start a new round of high growth.

3) Marketing: the market is rising compared with the same period last year, and the subdivision channel is in a period of fluctuation adjustment.

According to CTR, the advertising market rose 5.4% from January to July from a year earlier, and advertising market spending rose 8.7% in July from a year earlier, basically the same as the previous month. Monthly spending fell slightly by 0.8% from the previous month, a decline of 3 percentage points from the previous month. Television, radio and outdoor channels have their own fluctuations; in the head list, beverages, medicines, entertainment and leisure, cosmetics / bathroom products benefited from the pick-up of the cultural and travel market, and advertising increased significantly.

Risk hint

The risk of intensified market competition, the risk of policy and regulatory environment, the risk of content censorship or review, and the less-than-expected commercialization of AIGC.