Intelligent Financial APP learned that Huajin Securities published a research report stating that in 2023, the global authorized merchandise and service retail sales once again achieved steady growth, reaching 356.5 billion US dollars, a year-on-year increase of 4.6%. With the development of the digital age, IPs are shifting from a synonym for intellectual property to the core driving force of content business models. Games and films are the main driving forces in the Chinese entertainment IP market, with the game IP derivative market exhibiting accelerated development trends in recent years. The IP operation, development, and authorization system ecology is gradually becoming more complete, and game companies and publishing houses will adopt IP strategies. With the diversification of media channels, the increasing number of diverse small IPs and circle culture IPs, shorter, faster, and more emotionally direct IPs have become the new preference. The domestic authorization market continues to grow, with both supply and demand sides of IPs helping each other to promote industrial development.

Event: The 17th China Licensing Expo concluded successfully at the Shanghai Pudong New International Expo Center. The exhibition featured 2400+ IPs from various categories both domestically and internationally, attracting 86,128 professional visitors, a 30% year-on-year increase, including 1,976 overseas buyers, a 110% year-on-year increase.

The global licensing industry is steadily developing, with significant growth in entertainment/character business. According to statistics from the International Licensing Industry Merchandisers' Association, the global authorized merchandise and service retail sales once again achieved steady growth in 2023, reaching 356.5 billion US dollars, a year-on-year increase of 4.6%. In 2023, the retail sales of authorized goods and services in China reached as high as 13.77 billion US dollars, compared to 12.57 billion US dollars in 2022, a year-on-year increase of 9.6%. In terms of licensing industry categories, entertainment/character business revenue increased by 9% to reach 147.6 billion US dollars. Among the segmented markets, anime, video games, and social media accounted for 38% of the global retail sales in 2023. Emerging games, characters, or brands accounted for 22% of the entertainment sector.

The IP content business model is gradually becoming clearer, and the prospects for domestic IP development are optimistic. With the development of the digital age, IPs have shifted from being synonymous with intellectual property to the core driving force of content business models. The content business model of IPs can be divided into: content copyright and derivative product authorization, where IPs include various forms such as book publishing, games, films, animations, and comics. The characteristics of the IP content business model are: 1. Supply mainly consists of digital content on the Internet, with the development of the Internet lowering the barriers to creation and publication. 2. IP content essentially involves migrating content to different media for reinterpretation, requiring relatively mature ecosystems on various channels. Games and films are the main driving forces in the Chinese entertainment IP market. In recent years, the game IP derivative product market has shown an accelerating development trend, with the market size of game IP derivative products reaching 4.06 billion yuan in 2023, achieving a compound growth rate of 17% from 2019 to 2023.

Domestic user groups: Mainly composed of post-2000 high school students, college students, and young professionals. In the past, the IP market was mainly dominated by male figure model enthusiasts; currently, the proportion of female gamers is relatively high. Domestic IPs are gradually rising, and the number of content and derivative product designs developed in an IP model is increasing gradually. The IP operation, development, and authorization system ecology is gradually becoming more complete, and game companies and publishing houses will adopt IP strategies. According to the interactive volume data provided by Weibo Animation, domestic anime IPs occupy 46% of the market share, which is close to Japanese anime IPs, and this proportion continues to grow.

Interest and emotional consumption are gradually becoming the core driving forces of consumption, and consumption combined with IPs is becoming a development trend. Throughout all stages of consumption, the influence of IPs continues to deepen. User preferences for IPs are changing, with the diversification of media channels, the increasing number of diverse small IPs and circle culture IPs, shorter, faster, and emotionally direct IPs have become the new preference. Changes in upstream IPs have multi-dimensional impacts on downstream consumer products, categorizing the association between consumer products and IPs into three levels: direct derivative products, IP-empowered products, and marketing collaboration products. Direct derivative products include trendy and peripheral products; IP-empowered products give products with certain functionalities new value through IPs, represented by Miniso; while marketing collaborations, as seen in Luckin Coffee, enhance the exposure of a product or product line.

Investment Advice: The domestic licensing market continues to grow, and the mutual assistance of IP supply and demand promotes industry development. Recommended to focus on: Col Group Co.,Ltd. (300364.SZ), Alpha Group (600229.SH), Shanghai Yaoji Technology (002605.SZ), Huayi Brothers Media Corporation (300027.SZ), BlueFocus Intelligent Communications Group (300058.SZ), Kingnet Network (002517.SZ), G-bits Network Technology (603444.SH), Beijing Jetsen Technology (300182.SZ), Tianyu Digital Technology (002354.SZ), Inly Media Co., Ltd (603598.SH), Kuaishou-W (01024), etc.

Risk Warning: Uncertainty in relevant policies, industry development falling short of expectations, uncertainty in consumer preferences, etc.