On April 26, the State Press and Publication Administration released approval information for domestic online games in April 2024. A total of 95 games were approved.
The Zhitong Finance App learned that on April 26, the State Press and Publication Administration released approval information for domestic online games in April 2024. A total of 95 games were approved, including the 4 games “Ancient and Modern 2: Fengqi Penglai”, “Huaxia Pictorial Record”, “Lost Island Outbound Pumpkin Town”, and “The Bustling Scenery of Ten Continents” under Zhongqingbao (300052.SZ). In addition, “Shattered Land” by NetEase S (09999) is also on the list. Earlier, on April 8, the State Press and Publication Administration announced version approval information for 14 imported games. After 14 import and export games were approved at the beginning of the month, 95 more domestic games received edition numbers this month. The number of game editions distributed has exceeded 100 for five consecutive months.
Judging from the declared categories, it includes 1 client/game console (PS) game, 4 mobile and client games, and the remaining 90 games are all mobile games. Major companies involved include NetEase's “Shattered Land”, Zulong Entertainment (09990)'s “Dragon Clan: Cassel's Gate”, and “I Want to Open a Martial Arts Hall” by Migu Entertainment under China Mobile (00941).
Furthermore, it is worth noting that on April 10, Blizzard Entertainment, Microsoft Games, and NetEase jointly announced that Blizzard Entertainment's game titles, which are loved by millions of local players, will return to the mainland China market one after another starting this summer in accordance with the updated game distribution agreement. After continuing discussions over the past year, Blizzard Entertainment and NetEase are very happy to reach an agreement to continue providing services to national service players in the future, and solemnly reaffirm their commitment to providing an excellent gaming experience.
The updated game publishing agreement will cover players' national service games under the previous agreement: “World of Warcraft”, “Hearthstone,” and other game series based on the respective game universes of “Warcraft,” “Overwatch,” “Diablo,” and “StarCraft.” On the basis of over 15 years of cooperation, Blizzard and NetEase are working hard to develop return plans, and more details will be announced in the future.
In terms of the game market, in 2022, the global game market's revenue rebounded by 9%; in 2023, although the decline in revenue on the Google Play platform led to a 2% drop in overall internal purchase revenue, it showed a strong year-on-year recovery compared to 2022. Coupled with the continued launch of boutique games, it is beneficial to the development of the game industry.
According to the “2023 China Game Industry Report” published by Gamma Data, in 2023, the actual sales revenue of the Chinese game market was 302,964 billion yuan, up 13.95% year on year, breaking the 100 million yuan mark for the first time. Among them, mobile games were the core driving force for industry growth. Actual sales revenue was 226.860 billion yuan, an increase of 33.802 billion yuan, an increase of 17.51% year on year.
Recently, Gamma Data released the “China Game Industry Monthly Report for February 2024". The report shows that in February 2024, the size of the Chinese game market grew 2.17% month-on-month and 15.12% year-on-year.
CITIC Construction Investment said that starting from Q2, it is optimistic about the recovery of industry sentiment. First, the number of editions increased markedly on the supply side. In January-March, the number of domestic editions surpassed 100, and the number increased 28% year on year; imported editions were distributed in batches every 3-4 months last year, and the frequency increased markedly this year, and the number increased 70% year on year. Second, since Q2, various key new products have gradually been launched, including Tencent's “DNF Mobile Game”, NetEase's “16 Sounds of Yan Yun”, “Eternity Mobile Game”, Perfect World's “P5X Mobile Game”, Kaiying Network's “Wacky Chicken”, “The Land of Douro: Legend of the Evil Dead”, and Youzu's “Journey to the West 2.”
Furthermore, the bank believes that AI+ games have the opportunity to break through several pain points: 1) in terms of cost reduction and efficiency, AI generation 3D technology tends to be mature+ usable, and from NERF models to 3D Gaussian, it is expected that low-cost and low-latency 3D rendering can be achieved; 2) In terms of new gameplay, AI+UGC companies are exploring. As long text capabilities improve, new track opportunities such as AI text reasoning and AI otome games are expected to be born. Judging from the stock price position, the sector is clearly at a low level. The gaming index fell 9% year to date, clearly outperforming the rest of the media sector. Currently, core companies in the game sector have a 24-year PE within 15x, which is at the lower limit of the historical quantile range.
Galaxy Securities released a research report stating that the short-term systemic decline in the industry at the beginning of the year will not change long-term value, and it is expected that the implemented regulatory policy documents will be relatively soft. At present, pessimism has been fully released, and the trend of valuation repair is obvious. Combining AIGC-related technological breakthroughs may increase the productivity level of the entire game industry in the long term.
Related concept stocks:
Bilibili-W (09626): At the 2023 fourth quarter results meeting, the company said that game revenue in the fourth quarter increased 2% month-on-month to reach 1 billion yuan, with annual revenue of 4 billion yuan. Currently, 3 games in the company's pipeline have obtained domestic game versions, including the Japanese card game “Blazing Sky”, the domestic SLG game “Three Kingdoms: Determining the World”, and the domestic card game “Everything Is New.”
NetEase - S (09999): UBS pointed out in the research report that NetEase will publish the blockbuster “Project Eagle” on March 28. It is initially estimated that the first 12 months after the launch of the new work will contribute about 6 billion yuan in revenue, or 6% of NetEase's total revenue in 2023, and is expected to contribute 800 million to 1 billion yuan in revenue for the first month.
China Mobile Games (00302): China Mobile Games insists on building a diversified IP game ecosystem, forming a core competitive advantage with “IP resources - independent research and development - global distribution - own IP operation - Guofeng Metaverse platform”. It has complete plans to launch new games and rich product reserves.
Tencent Holdings (00700): Starting January 21, the Douyin live broadcast of “Wang Zhe Rongyao” will be fully open. “Yuanmeng Star” performed well, and has rich game reserves or continues to drive the growth of the game business.