The overall trend of improving the issuance of publishing licenses will continue to optimize the supply side. The new product cycle of the gaming industry is gradually opening up, and the profitability of various gaming companies will gradually stabilize. At the same time, it will drive further growth in the gaming market.
According to the information obtained from the Zhongtong Finance APP, China Galaxy Securities has released a research report stating that the overall trend of license issuance will continue to optimize the supply side. The new product cycle of the gaming industry is gradually opening up, and the profitability of various gaming companies will gradually stabilize, thereby promoting further growth in the gaming market. In the long term, technologies such as AIGC will reduce costs and improve efficiency throughout the gaming industry chain, enhance user interaction experience, and break through the limit of willingness to pay.
The bank focuses on recommending gaming companies with strong R&D capabilities, large R&D investments, and abundant reserves. Recommended companies include Tencent Holdings (00700), NetEase-S (09999), G-bits (603444.SH), KAIYING Network (002517.SZ), 37 Interactive Entertainment (002555.SZ), Perfect World (002624.SZ), and other companies.
The main points of China Galaxy Securities are as follows:
Event: On July 26, 2023, the National Press and Publication Administration officially released the approval information for domestic online games in July, with a total of 88 domestic online games obtaining licenses.
Continued issuance of domestic licenses, continuous improvement in the supply side.
In terms of quantity, a total of 88 games were approved this time, which is basically the same as the numbers in April, May, and June, which were 86, 86, and 89 respectively. The number of license issuances in 2023 has exceeded the total for the whole year of 2022, and the approval process for licenses has gradually become more relaxed. In terms of product ownership, Tencent and NetEase did not obtain any new game licenses this month, but many other major companies have obtained licenses for new games, including KAIYING Network's "Legend of Liangshan", Glacier Network's "Fishing World", Xishanju's "Swordsman World: Origin", Zongheng Network's "Douluo Continent: Shrek Academy", G-bits' "Strongest Castle", Chuangmeng Tiandi's "Delta Force", 4399's "Qimen Town", Qingci Culture's "Knight Charge", and Xindong Network's "Sword of Bellflower: For this Peaceful World". We believe that the overall trend of license issuance will continue to optimize the supply side, the new product cycle of the gaming industry is gradually opening up, the profitability of various gaming companies will steadily release profits, and it will promote further growth in the gaming market.
Abundant reserves of new games from major companies, continuous catalysis of AI.
Currently, various gaming companies have abundant reserves of mobile games. With the continuous supply of content, we believe that companies in the industry will continuously release profits, and overall performance will gradually improve. At the same time, AI will continue to empower cost reduction and efficiency improvement. In terms of computing power, under the continuous penetration of ChatGPT, the flywheel effect of the combination of software and hardware in the AIGC field is gradually forming. In terms of content, AIGC is deeply penetrating into various aspects of game development, including the generation of game assets, optimization of content updates, game operation and management, etc., and it is rapidly being applied, with the potential to achieve cost reduction and efficiency improvement. We believe that with the maturity of multi-modal AIGC applications that can intelligently recognize and process various types of information in games, such as voice, images, and text, the freedom and diversity of gameplay and plot are expected to be significantly improved, thereby providing players with more choices and challenges, and further increasing the frequency and depth of user payments. Risk Warning
AIGC's technological development may fall short of expectations due to stricter industry policy regulations and intensified competition in the domestic and international gaming markets.