The Zhitong Finance App learned that GF Securities released a research report saying that in 2024, attention to console and mobile games will increase, and the market size is expected to expand. In 2025, companies are rich in new product reserves, and launch performance is highly anticipated, which is expected to drive a reversal in sector performance. At the same time, AI continues to empower the sector, and the implementation of new applications is expected to drive up sector valuations. Furthermore, with the improvement of mergers and acquisitions of game companies and the release of new products, it is expected to have a clear positive effect on the company. It is recommended to actively monitor the progress of mergers and acquisitions in the game market.

The main views of GF Securities are as follows:

A-share companies ushered in a product inflection point, which is expected to drive a reversal in sector performance

Recently, the overall performance of new A-share products has been excellent. On the SLG circuit, Qimai data shows that Century Huatong's “Endless Winter” continued to rank high after its launch in May; the new MMO circuit broke through, and Perfect World's “World of Immortals” official Weiwei announced that it had more than 0.3 million queues on the first day of product launch. 37 Interactive's “The Explosion of Time” and Gibbit's “Asking the Sword for Eternity” were officially launched on January 2. Qimai data showed that the two products ranked high on the first-day free list, and the impact of the new game increased significantly.

At the same time, companies have abundant reserves and are ready to go. According to the official websites of various companies and Wande, 37 Mutual Entertainment's major IP products “Doulo Continent: Soul Hunting World” and Kaiying Network's “Dragon Valley World” are all expected to be launched on 25H1. Shenzhou Taiyue's “Code DL” and “Code Name LOA” are gradually being commercialized. A-share companies have shown outstanding performance in online products, have abundant reserves of new products, and are still competitive in the industry. The product cycle is expected to drive a reversal in performance.

Industry mergers and acquisitions enhance company value and keep an eye on the progress of mergers and acquisitions

Looking back at the merger and acquisition path of Take Two and Century Huatong, mergers and acquisitions are an important way for game companies to grow. As a creative industry, mergers and acquisitions help the company absorb excellent intellectual resources, enrich the product line, continue to export excellent works, and drive the company's growth.

With the improvement of merger and acquisition company integration and the release of new products, it is expected to have a clear positive effect on the company. The game industry has an excellent business model, and leading companies usually have plenty of cash. It is recommended to actively monitor the progress of mergers and acquisitions in the game market.

AI continues to empower the sector and drive valuation increase

AI has diverse applications in terms of gameplay and auxiliary functions. AI has been initially incorporated into games in categories such as reasoning and sandboxes. Companion products are highly accepted in the market and are expected to become a breakthrough direction for applications. Traditional game categories are actively introducing AI technology to enhance playability.

Overall, the ability to combine AI with gameplay continues to improve. Furthermore, AI-related development tools continue to be improved, which is conducive to speeding up game development and testing new gameplay, thereby attracting new users, increasing payments, driving the expansion of the game market, and increasing sector valuation.

Investment advice: A-share companies have been rich in reserves and have flexible performance in 25 years. AI empowerment is expected to boost industry valuations

Continue to recommend Kaiying Network (002517.SZ) (the “Legend” basic version is stable, and many products are ready to go), Perfect World (002624.SZ) (“World of Immortals” has excellent performance, “Different Ring” has potential, and layoffs drive costs down), Shenzhou Taiyue (300002.SZ) (new product SLG launched, looking forward to operating performance), 37 Entertainment (002555.SZ) (“Doulo” IP new products are expected to be launched, new games are expected to be launched recently), Gibbitt (new products are expected to be launched), Xindong Company (02400), etc.; suggestions 603444.SH Follow ST Huatong (002602.SZ) (“Endless Winter” top seller list), Yao Ji Technology (002605.SZ), Electric Soul Network (603258.SH), Glacier Network (300533.SZ), Dream World (01119), etc.

Risk warning: Game industry regulation strengthens risks, industry competition increases risks, and product launches fall short of expectations.